Wayne R Thompson CPA

IRS tax filing season will begin today, Monday January 24, 2022.

CHARITABLE CONTRIBUTIONS

For the 2020 tax year, a new "above-the-line" deduction was allowed for up to $300 of charitable cash contributions. Only people who claimed the standard deduction on their tax return (rather than claiming itemized deductions on Schedule A) could take this deduction.

The write-off was originally scheduled to expire after 2020, but it was later extended to 2021 – with one important enhancement. For 2020, one deduction was allowed per return, meaning married couples who filed jointly could only deduct $300, not $600. However, for 2021, one deduction is allowed per person, which means married couples can deduct up to $600 on a joint 2021 tax return.

The 2020 suspension of the 60%-of-AGI limit on deductions for cash donations by people who itemize was also extended through the 2021 tax year.

UNEMPLOYMENT COMPENSATION

The American Rescue Plan Act made up to $10,200 of unemployment compensation ($20,400 for married couples filing jointly) exempt from federal income tax for households with an adjusted gross income less than $150,000 (the IRS sent refunds to people who filed their return before the exemption was enacted).

Unfortunately, the exemption only applied to unemployment compensation received in 2020. So, for 2021, unemployment compensation are taxed like wages.