As we approach the end of the year, thoughts turn to generosity and gift-giving. Many people choose to do most or all their charitable gifting at the end of the year.
For those that itemize, charitable contributions are taken as an itemized deduction on their individual tax return. For tax year 2021, even if you don’t normally itemize on your tax return you can take an adjustment to your adjusted gross income of up to $300 ($600 for married individuals filing joint returns) for your cash donations.
Below is our list of year-end charitable giving tips:
- Save all records of cash and non-cash donations
- This includes donations made by check or credit card
- If your donation is a cash donation of $250 or greater, you should receive a letter of acknowledgment from the receiving organization
- Take pictures of your non-cash donation receipts
- Goodwill
- Salvation Army
- Etc.
- Consider making the donation with your credit card for cash flow purposes
- You can make the donation by 12/31/2021 and not need to pay until the statement date in 2022
- You may be eligible to deduct travel and out-of-pocket expenses incurred for charities
- Must be a qualified charity and your time must be for real and substantial services to the charity
- You cannot deduct for your time or services provided to the charity
- Travel you can deduct (you cannot deduct travel if a significant portion of your trip is for recreation/vacation)
- Flights and public transportation
- Vehicle expenses
- Lodging costs
- Cost of meals
- Taxi, rideshare, or other transportation costs between the airport or station and your lodging
- Out-of-pocket expenses that can be deducted must be necessary and must be
- Unreimbursed
- Directly related to the time/services provided to the charity
- Directly related to services provided
- Not personal, family, or living expenses
- Must be a qualified charity and your time must be for real and substantial services to the charity
Other tax-advantaged charitable giving includes Qualified Charitable Distributions (QCDs) and donations of appreciated stock or other assets.
To learn more about how your generosity can benefit you come tax time, please reach out to email@wheelercpa.com or call our office:
San Jose: (408) 252-1800
Watsonville: (831) 726-8500