why charity donation does not reduce the federal tax due amount

[bhtran62]

For tax 2021 return, I noticed that the charity donation did NOT reduce the federal tax due amount at all until the entered donation amount was more than $2,400. For example, if the tax due was $500 before entering charity donation, tax due remained the same $500 after $2400 donation was entered. If I continue to add $200 donation (total donation is $2600 now), I started seeing the federal tax due reduced to $470 from $500.  Note that for tax 2020, every single dollar donation helped reduce my federal tax due.

I would like to know why the first $2400 donation has no impact on my 2021 tax return.

Thanks, Brian

[JamesG1]

Charitable contributions and other itemized deductions must exceed your standard deduction before you begin to see a benefit towards reducing your tax burden and increasing a tax refund.

At or about $2,400, the accumulation of your itemized deductions must have exceeded your standard deduction.  The 2021 standard deduction for a Single taxpayer is $12,550.

When reporting for 2020, you had already equaled or exceeded your standard deduction when you began to enter charitable contributions.

The standard deduction or itemized deductions can be viewed on line 12a of your Federal 1040 tax return at Tax Tools / Tools / View Tax Summary / Preview my 1040.

See also here.

[bhtran62 · Accepted solution]

Hi James,

Thanks for the reply. However, I previewed the form 1040 line 12a and the amount was $18,800 (exceeded $12500) before any donation was entered. So I should expect the benefit of any donation amount, right?

BTW, I noticed something very strange. When the donation was $2500, line 12a amount remained at $18800. Hence no change in the tax due amount. However, when the total donation changed to $2600 ($100 addition), line 12a amount changed  $19197. Hence, the tax due amount was reduced quite a bit. Note the difference in line 12a was $397 (19197-18800). I expected the difference to be equal or less than $100. Is it right?

Could you please let me know your thought?

Thanks, Brian

[FangxiaL]

Let me try to make sense of these  numbers:

• Line 12a: $18,800 is the standard deduction for your Head of Household filing status; if you made at least $300 cash donation, Line 12b should have $300, so your total deduction without itemizing is $19,100, compared with itemized deductions, you are still better off taking the standard deduction because your total itemized deductions are under $19100 when you donate less than $2500. Total itemized deductions = $2500 + mortgage interest + up to $10000 in state income tax/sales tax + property tax);
•  
• Line 12a: $19197  is the itemized deduction, which is $97 more than the standard deduction.   

@bhtran62
 

[bhtran62]

Hi FangXia,

Thank you very much for your response. I missed the standard deduction for the Head of Household status. I understood it now. The question is resolved.

Regards,

Brian