How to score a tax write-off for 2021 donations to charity if you don’t itemize deductions

Single taxpayers can claim a tax write-off for cash charitable gifts up to $300 and married couples filing together may get up to $600 for 2021.

If you’re one of the millions of Americans who gave to charity in 2021, you can still claim a write-off on this year’s tax return.

There’s a deduction for cash gifts up to $300 for single filers and couples filing jointly may score up to $600, according to the IRS.

And it’s easier for more filers to qualify for the 2021 charitable tax break, financial experts say. Here’s why.

Introduced as part of the CARES Act of 2020, Congress provided charities a boost by offering an incentive for Americans to make cash gifts. Lawmakers extended the write-off for 2021.

“This is a unique opportunity to take advantage of a temporary tax benefit,” said Juan Ros, certified financial planner at Forum Financial Management in Thousand Oaks, California.

The charitable write-off isn’t “above-the-line,” so it won’t affect adjusted gross income. But it’s not an itemized deduction, either.

With nearly 90% of filers using the standard deduction, it can be difficult for the average American to claim tax breaks for smaller charitable gifts since they must itemize to receive the benefit.

However, the temporary law allows those taking the standard deduction of $12,550 for single filers or $25,100 for married taxpayers to qualify in 2021.

“This means anyone can deduct a cash contribution to a qualifying charitable organization even if the taxpayer is unable to itemize deductions,” said David Haas, a CFP and president of Cereus Financial Advisors in Franklin Lakes, New Jersey.

The cash gift, including payments by check, credit card or debit card, must have gone to a qualified charity. Transfers to a donor-advised fund or private foundation won’t count.

Bigger tax breaks

While the tax breaks up to $300 or $600 are a perk for many filers for 2021, those who itemize deductions may get a bigger write-off by gifting other types of assets in 2022.

For example, if someone has appreciated stocks or other investments held for more than one year in their taxable portfolio, they may consider transferring those assets to charity.

Here’s why: The donation may avoid capital gains taxes of 0%, 15% or 20% for 2022, depending on income. To make it work, investors must give the assets directly to the organization rather than selling and donating the proceeds.

“This is an excellent opportunity for someone who has invested in an asset that has performed well and wants to diversify their holdings but doesn’t want the capital gains hit,” said Danielle Harrison, a CFP, fee-only financial planner and founder of Harrison Financial Planning in Columbia, Missouri.

Of course, there are many factors to consider, and a tax professional may provide guidance for the optimal strategy.