Charitable Giving Tax Tips from the IRS
Important charitable giving reminders for taxpayers
Giving Tuesday is the kickoff of the season of charitable giving. The IRS encourages taxpayers to research charities before donating and to familiarize themselves with the expanded tax benefits that may come with giving to causes that mean something to them.
Taxpayers may be able to deduct donations to tax-exempt organizations on their tax return. As people are deciding where to make their donations, the IRS has a tool that may help. Tax Exempt Organization Search on IRS.gov is a tool that allows users to search for charities. TEOS provides information about an organization’s federal tax status and filings.
Here are some facts about the Tax Exempt Organization Search tool:
Donors can use it to confirm an organization is tax-exempt and eligible to receive tax-deductible charitable contributions.
Users can find out if an organization had its tax-exempt status revoked. A common reason for revocation is when an organization does not file its Form 990-series return for three consecutive years.
TEOS does not list certain organizations that may be eligible to receive tax-deductible donations, including churches, organizations in a group ruling, and governmental entities.
Organizations are listed under the legal name or a “doing business as” name on file with the IRS. No separate listing of common or popular names is searchable.
Taxpayers can also use the interactive tax assistant, Can I Deduct my Charitable Contributions? to help determine if a charitable contribution is deductible. They should get a written acknowledgement for any charitable contributions of $250 or more.
Expanded tax benefits
The law now permits taxpayers to claim a limited deduction on their 2021 federal income tax returns for cash contributions they made to certain qualifying charitable organizations even if they don't itemize their deductions. Taxpayers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions to qualifying charities during 2021. The maximum deduction is $600 for married individuals filing joint returns.
Qualified charitable distributions
Taxpayers age 70 ½ or older can make a qualified charitable distribution, up to $100,000, directly from their IRA, other than a SEP or SIMPLE IRA, to a qualified charitable organization. It’s generally a nontaxable distribution made by the IRA trustee directly to a charitable organization. A qualifying deduction may also count toward the taxpayers required minimum distribution requirement for the year. Taxpayers should review Publication 590B, Distributions from Individual Retirement Arrangements for more information.
Most cash donations made to charity qualify for the deduction. However, there are some exceptions. Cash contributions that are not tax deductible include those:
Made to a supporting organization
Intended to help establish or maintain a donor advised fund
Carried forward from prior years
Made to most private foundations
Made to charitable remainder trusts
These exceptions also apply to taxpayers who itemize their deductions.
Cash contributions include those made by check, credit card or debit card as well as unreimbursed out-of-pocket expenses in connection with volunteer services to a qualifying charitable organization. Cash contributions don't include the value of volunteer services, securities, household items or other property.