It’s no secret that charitable giving is civically beneficial. For many people, it may be tax beneficial as well. 2020 was a landmark year for charitable giving, and 2021 looks to end on a similar high note. A common misconception is that all charitable giving has a tax benefit.
The Tax Impacts of Taking the Standard Deduction or Itemizing
At a very basic level, every taxpayer owes taxes on income subject to certain credits and deductions, which reduce the amount owed. Every taxpayer has the choice of taking a standard deduction or itemizing the deductions based on what is most advantageous. The standard deduction for a single taxpayer in 2021 is $12,550 ($25,100 for married filing jointly). The standard deduction increases for those 65 or older (or blind) by another $1,300.
There are several factors that go into calculating itemized deductions (such as the amount of mortgage interest or the amount donated to charity). When adding these factors together, if the amount totals more than the standard deduction, it is often advantageous to decide on itemizing deductions as opposed to taking the standard deduction.
Read the full article on the PBMares Wealth Management website.