Tax Deduction: Maximum Charitable Contributions in 2021

How do we calculate the maximum amount of properly substantiated charitable contributions that Moore could claim as an itemized deduction for 2021?

What factors need to be considered in determining the maximum amount of charitable contributions for tax deduction?

Calculating Max Charitable Contributions for Tax Deduction

Moore, a single taxpayer, had an adjusted gross income (AGI) of $50,000 in 2021. She contributed $23,000 in cash to her church during that year and had a $10,000 charitable contribution carryover from her 2020 church contribution.

To determine the maximum amount of properly substantiated charitable contributions that Moore could claim as an itemized deduction for 2021, certain factors need to be taken into account. The maximum amount a taxpayer can claim for tax deductions is generally limited to a percentage of their AGI, which in this case is 60%.

To calculate the maximum amount Moore could claim, we follow these steps:

Step 1:

Determine 60% of Moore's AGI: 60% of $50,000 is $30,000.

Step 2:

Add any carryover from previous years: Moore had a $10,000 carryover from her 2020 church contribution.

Step 3:

Compare the total to the actual contributions made: Moore contributed $23,000 in cash to her church in 2021.

Step 4:

The maximum amount Moore can claim as an itemized deduction is the lesser of the two: $23,000 (actual contributions made) is less than $30,000 (60% of her AGI plus carryover), so the maximum amount Moore can claim is $23,000.

By considering these factors and calculations, Moore can claim a maximum of $23,000 in properly substantiated charitable contributions as an itemized deduction for the tax year of 2021.