Raymond James senior vice president of investments and managing director Lisa Detanna oversees the firm’s Global Wealth Solutions Group in Beverly Hills, California. Possessing upward of three decades of experience, Lisa Detanna is well versed in areas including tax planning, gift planning, and philanthropy.
At the end of 2020, Congress passed a year-end spending package that included two tax changes for the 2021 tax year. The first of these is an extension on the charitable deduction amount allowed on individual taxes from 2020. This change grants an above-the-line deduction of up to $300 in cash donations, per person. Married filers can deduct up to $600 in cash donations if they file a joint return.
Since this is an above-the-line deduction, it is available for people who do not itemize their deductions. This is good news, since the increase in the standard deduction starting in 2017 made itemizing deductions unnecessary for many filers. However, it must be noted that the above-the-line deduction only applies to cash gifts. Donations of furniture, cars, or clothing do not count, nor do donations to private foundations or donor-advised funds.
The second provision that Congress signed into law suspends the cap on deductible donations. In the past, donations could only be deducted if they were up to 60 percent of adjusted gross income. This limit is temporarily suspended for 2021, so donors are capable of deducting much more if they make generous donations throughout the year.
At the same time, the IRS increased its penalties for overstating charitable tax deductions. Filers who overstate their deductions are subject to a 50 percent penalty on the total amount deducted. Before, this penalty was only 20 percent of the total amount.
At the end of 2020, Congress passed a year-end spending package that included two tax changes for the 2021 tax year. The first of these is an extension on the charitable deduction amount allowed on individual taxes from 2020. This change grants an above-the-line deduction of up to $300 in cash donations, per person. Married filers can deduct up to $600 in cash donations if they file a joint return.
Since this is an above-the-line deduction, it is available for people who do not itemize their deductions. This is good news, since the increase in the standard deduction starting in 2017 made itemizing deductions unnecessary for many filers. However, it must be noted that the above-the-line deduction only applies to cash gifts. Donations of furniture, cars, or clothing do not count, nor do donations to private foundations or donor-advised funds.
The second provision that Congress signed into law suspends the cap on deductible donations. In the past, donations could only be deducted if they were up to 60 percent of adjusted gross income. This limit is temporarily suspended for 2021, so donors are capable of deducting much more if they make generous donations throughout the year.
At the same time, the IRS increased its penalties for overstating charitable tax deductions. Filers who overstate their deductions are subject to a 50 percent penalty on the total amount deducted. Before, this penalty was only 20 percent of the total amount.
