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Some key tax provisions from COVID-19 related legislation

By: Dean Dorton | February 17, 2021

Significant tax legislation due to the COVID-19 pandemic was enacted last year, including charitable donations, business meals at restaurants, and personal protective equipment purchased by teachers.

2021 Spring Edition | COVID-19 | COVID-19 Tax | News & Views | Tax

By: Jon Tennent, CPA | jtennent@deandorton.com

Significant tax legislation due to the COVID-19 pandemic was enacted last year.

One such change is the treatment of charitable donations to public charities. Previously, individuals have been required to itemize their deductions to benefit from charitable contributions. For 2020, however, they can deduct up to $300 of cash contributions in addition to their standard deduction without itemizing and regardless of their filing status. For 2021, single filers may continue to take advantage of this $300 deduction if they do not itemize; for married joint filers, the deduction limit is increased to $600.

Further, individuals who itemize can now deduct cash contributions up to 100% of their adjusted gross income (up from 60%); C corporations can now deduct up to 25% of their taxable income (up from 10%); and for qualified disaster relief, C corporations can now deduct up to 100% of their taxable income.

Previously, the cost of meals on business tax returns was limited to a 50% deduction. Business meals at restaurants can now be deducted 100% in calendar years 2021 and 2022. Note that this increased deduction does not apply to 2020, and the meals can only be purchased from restaurants.

Another provision relates to teachers who purchase personal protective equipment, disinfectant, and other supplies to prevent the virus’s spread. The cost of these items now qualifies as an educator expense and is eligible for deduction for purchases on or after March 12, 2020. However, the above-the-line deduction for unreimbursed educator expenses remains capped at $250.

This article was originally published in News & Views (Dean Dorton’s quarterly newsletter).

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