Illustration for item titled You can use both the standard and charitable donation prints this yearPhoto: Vladimir Sukhachev (Shutterstock)Tax weekTax weekWith the upcoming tax return, Two Cents is putting its green eyes on and focusing on stories that will help you manage tax preparation and get the most out of your returns.

When filing your taxes you don’t overlook any new ones Tax relief for charitable contributions This allows you to deduct $ 300 from your taxable income even if you are already using the standard withholding. Since this is a new and above-the-line trigger, it’s easy to miss – especially if you’re a typical W-2 employee who tends to take taxes on the autopilot.

What is the charitable contribution deduction?

In response to COVID, the CARES Act introduced a new $ 300 deduction for charity for individuals or joint applicants in the 2020 tax season (see am Line 10b on form 1040). A year-end bill also extended this tax break to 2021, so those who are married and file together will each receive a $ 300 deduction for a total of $ 600.

Illustration for item titled You can use both the standard and charitable donation prints this year

The key here is that this is one Trigger above the line. Typically, for charitable contribution tax breaks, you’ll need to list your deductions one by one, however 87% of filers receive the standard printand thus forego non-profit tax breaks. The reason for this is that the Standard Flat Rate Deduction is usually a better option for lowering your total taxable income, albeit no more convenient than the breakdown (the deduction is $ 12,400 for single applicants and $ 24,800 for spouse joint registration). In this case, however, you can claim back some taxes on money donated to charity, even with the standard allowance.

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Some restrictions apply

The deduction only applies to cash donations (cash, credit or debit cards, checks, electronic transfers). So you can’t claim clothes that you might be giving away to goodwill or non-perishable food to a pantry. You also cannot deduct contributions from your time or services such as volunteering. You cannot claim a contribution that includes an exchange of goods from which you could personally benefit, e.g. B. a purchase at a charity cake sale or the purchase of a competition ticket.

Finally, in the eyes of the IRS, the charity must be a qualified organization. Use this option before applying for a donation IRS lookup tool to see if the charity is eligible to receive tax-deductible donations to charity.