If you plan to make charitable donations this year, you can’t afford to miss out on the charity donation tax breaks available to you. Learn more about the new tax incentives you could be eligible for, and contact Tax Law Offices today!
Why Should I Care?
The IRS confirmed that the government is cracking down on “improper” charity tax deductions. IRS audits will increase — especially for itemized deductions — because the IRS is hiring more audit staff to seek out and find more taxes to collect. In these circumstances, charitable-minded taxpayers like you could owe more in taxes after the audit. You could be vulnerable to these types of audits if:
- You made any mistake in the amount claimed on your tax return
- What you claimed was not deductible because of a misinterpretation of tax law
Of course, it’s always preferable to avoid making a tax mistake or repeating an IRS problem. The team at Business Tax Settlement is here to help.
What are the new IRS charitable tax incentives, and who do they help?
1. Individuals who do not itemize deductions
Normally individuals that choose to take a standard deduction can’t make any claim at all on their charitable donations. Now, these individuals can claim a limited charitable donation deduction on their 2021 Federal Tax Return. These individuals, including married individuals filing separately, can claim a deduction of up to $300 for cash contributions to qualified charities. Married couples filing jointly can claim a deduction of up to $600.
2. Individuals who DO itemize their deductions
Typically, itemizers can claim a deduction of 20%-60% of their income. Now, those individuals can apply for an increased individual limit of up to 100% of their income for qualified contributions made during the 2021 calendar year.
3. Corporations
Corporations can now apply for an increased limit of 25% of taxable income for cash charitable contributions made to qualified charities during 2021. The previous limit was 10%.
4. Corporations that make food donations
Businesses that are donating food inventory and are eligible for the existing enhanced deduction may qualify for an Increased Deduction Limit.
For qualified donations made in 2021, the limit for these contribution deductions is increased from 15% to 25%.
Don’t forget to keep good records.
Special record-keeping rules apply to any taxpayer claiming a charitable contribution deduction.
For more information about this or any other legal tax business questions, please reach out to us directly!