Ask The California Employment Tax And Payroll Tax Attorney – A One Time Charitable Year-end Tax Break Helps Those Who Do Not Itemize Deductions

By Robert S. Schriebman
2021

Introduction

The IRS has recognized that the economics of the pandemic have hurt most charities throughout the country. The IRS has also recognized that 90% of those filing tax returns, historically, take the standard deductions and do not itemize. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 created a one-time deduction for cash contributions to recognize charities. Originally the Act applied only to 2020, but it has been extended to 2021 for the 2022 tax-filing season.

Congress and the IRS tend to put a huge spin on small tax breaks for the American taxpayer. They act like they are doing us a huge favor in granting us relatively small tax breaks. This new contribution allowance is no exception – a lot of hype for relatively little!

On September 17, 2021 the IRS issued its initial press release IR-2021-190 and on December 13, 2021, the IRS issued its second press release IR-2021-247 explaining the extended allowance.

The new law allows individuals to deduct up to $300 for cash contributions made to qualifying charities up until December 31, 2021. Those filing joint returns, get a $600 cash contribution deduction. You get this deduction even though you take the standard deduction and do not itemize.

A cash contribution can be made by check, credit or debit card. You can also get this deduction for unreimbursed out-of-pocket expenses incurred in connection with volunteer services to recognized charities. However, you do not get a deduction for the value of your services. You have to lay out money and not get reimbursed. For example, if you are a volunteer member of the California military and have to pay for your own uniform, and other out-of-pocket expenses, you can get a deduction up to $300 for an individual and $600 for those filing joint returns.

Remember, you have to make the expenditure on or before December 31, 2021. Be wary of scam charities that look and sound like long-recognized established organizations.

Conclusion

I have two pieces of advice for making charitable contributions:

• Check out the charity to make sure it is legitimate and recognized by the IRS. Use the Tax Exempt Organization Search tool.
• Check to see how much of your donated dollar is actually going for doing good and not going to pay the salaries of executives or referral commissions.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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