Contributors to churches and other charitable organizations may take advantage of provisions of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 to lower their tax bills. According to the IRS, several temporary tax changes were extended through the end of 2021. These include:
- A deduction of up to $300 ($600 if married and filing a joint return) for charitable contributions during 2021— even for those who do not itemize and take the standard deduction.
- For those who do itemize, a charitable deduction can be claimed for cash donations up to 100% of adjusted gross income (AGI) for gifts in 2021.
Deductions of up to 100% of AGI may also be taken for charitable donations by businesses*.
For details, visit this link at IRS.gov. Churches may want to inform contributors at year-end about these tax incentives. The Evangelical Council for Financial Accountability (ECFA) has prepared a model letter to assist in doing this.
*Consult your tax professional for limited exceptions.