How to score a write-off on ‘Giving Tuesday’ if you don’t itemize
[ad_1]
Vladimir Vladimirov | E+ | Getty Images
Americans will spend Giving Tuesday after a long weekend of holiday shopping to support charity. $2.47 billion from U.S. donors2020
However, many people are unaware that there is a tax benefit for cash gifts in 2021 even though they do not itemize their deductions on the federal returns.
Assembled in part of the CARES Act of 2020Congress offered an incentive to Americans to give cash gifts and gave them a boost. For 2021, the lawmakers extended the deadline for the extension.
For cash donations over $300 single taxpayers can get a deduction, and for married couples who file jointly in 2021 they may receive up $600 according to the IRS.
Learn more about Invest in You
How a government shutdown would affect Dec. 15 child tax credit payments
Switching jobs can lead to higher pay. When to put yourself on the market
This millennial saved $100,000 and quit her marketing job by age 25
Juan Ros, certified financial advisor at Forum Financial Management, Thousand Oaks, California, said, “This is an exceptional opportunity to benefit from a temporary tax advantage.”
Close to 90% of filers using the standard deductionBecause they need to list the benefits, it may be challenging for an average American to obtain tax relief for small charitable gifts.
The temporary law however allows single filers to take the standard deduction of $12.550 and married taxpayers $25.100, respectively, in order to be eligible for the 2021 tax year.
David Haas (CFP) is the president of Cereus Financial Advisors Franklin Lakes. “This means that anyone can deduct cash contributions to qualifying charities even if they are unable to itemize deductions.”
You must send the cash gift (including payments via check, debit card, or credit card) to: qualified charity. Don’t transfer to any donor-advised funds or private foundations.
For itemizers, tax incentives are greater
Tax breaks of up to $300, $600 and other perks are great for filers. However, itemizing deductions can get you a greater write-off if you gift assets.
You might think about transferring assets that you have held in stock or another investment for longer than one calendar year to charity.
This is why the donation could be exempted from capital gains taxes at 0%, 15%, or 20% in 2021 depending on your income. Investors must donate the funds directly to the charity, rather than selling them and then donating.
“This is a great opportunity for someone who has invested successfully and wants diversification but not the capital gains,” Danielle Harrison (CFP), a fee-only financial advisor and cofounder of Harrison Financial Planning in Columbia.
A tax professional can help with guidance and recommendations.
[ad_2]