The holiday season is a traditional time for charitable giving. Giving money reflects the spirit of the holidays. Another factor is that donations made before the end of the year are tax deductible. However, taxes have less weight following changes in the 2017 tax law.
The standard deduction has been increased to $ 12,550 for singles and $ 25,100 for couples for 2021. The change significantly reduced the number of taxpayers receiving charitable deductions.
Nonetheless, individuals increased their donations in 2020 by 2.2%, or 1% after accounting for inflation. According to Giving USA 2021, individual giving estimated at $ 324 billion represents the highest inflation-adjusted total to date. Chances are charitable giving will increase even more in 2021. We are living in difficult times and people are responding with increased generosity.
Community spirit drives people to support the arts, house the homeless, and fund food kitchens. Faith is a powerful force with about half of all charitable contributions going to religious organizations. The variety of activities and social injustices tackled by nonprofit organizations are remarkable in their scope.
“They are monuments to the community,” wrote historian Daniel Boorstin. âThey come from the community, depend on the community, are developed by the community, serve the community, and rise and fall with the community. “
Lots of people donate money (like me). Money is simple and efficient. But there are many sound charitable giving strategies, many creatures of our Byzantine tax system.
The rich can increase the financial strength of their giving by donating valued stocks and other assets; make a qualified charitable distribution from individual retirement accounts; or bundle several years of contributions into a donor-advised fund, a popular philanthropic option.
Even if you take the standard deduction and don’t itemize, you can still take a deduction for charitable contributions – $ 300 for single filers and $ 600 for married couples filing jointly. To take advantage of this deduction, the contribution must be in cash.
The combination of the holiday season and the chronicle deadline prompted me to reconsider my charitable giving. I had done my research and wanted to give more while adding several local associations to my monthly donation list. It’s now off my to-do list. Generosity is a smart investment in the community, even if the tax code no longer supports your giving strategy.
Chris Farrell is a senior economics contributor for American Public Media’s Marketplace and commentator for Minnesota Public Radio.