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The Consolidated Appropriations Act of 2021 (CAA, Public Law No. 116-260) was signed into law on December 27, 2020. The Act extends and expands changes to the rules of charitable giving enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (CARES Act, Public Law No. 116-136) and increases the penalty for tax underpayments attributable to an overstated charitable contribution by a taxpayer who does not itemize.
(1) Expansion of the Above-the-Line Charitable Deduction. Under the CARES Act, individual taxpayers who take the standard deduction are allowed an “above the line” charitable income tax deduction equal to the amount of charitable cash gifts, but only up to $300. The CARES Act did not specifically address how the deduction applied to a married couple.