IRS, nonprofit groups raise awareness of special charitable tax break for 2021

The IRS and groups representing nonprofits on Monday spotlighted a special tax break that many households can claim for charitable donations made prior to the end of the year.

Under a coronavirus relief law enacted in December 2020, taxpayers who claim the standard deduction can take a deduction for charitable contributions made in 2021. Single filers can deduct up to $300 in donations and married couples can deduct up to $600 on the 2021 tax returns that taxpayers will file early next year.

The IRS and nonprofit groups want to make sure that taxpayers are aware of the deduction, as many charities have been challenged by the pandemic. Some charities have seen a drop in their donations, and some charities have seen an increased need for their services.

“The pandemic has created unique challenges for tax-exempt organizations, and we want to make sure people don’t overlook this special tax deduction that’s available this year,” Sunita Lough, a senior IRS official, said in a news release.

About 90 percent of households take the standard deduction and could potentially be eligible for the tax break, the IRS said. In typical years, only households that itemize deductions are eligible to deduct charitable contributions.

Cash donations, including contributions made by check, debit card and credit card, are eligible for the special deduction, the IRS said.

A similar nonitemized tax deduction was available for 2020 under the CARES Act relief law enacted in March 2020.

“Congress has sent a powerful message that everyone — not just those who itemize on their taxes — has a role to play in helping meet this moment, and we know people in America will respond in kind. We hope charitable contributions and deductions will increase in the coming years,” said Daniel J. Cardinali, president and CEO of Independent Sector, a membership organization for nonprofits.