Don't Miss 2021 Tax Incentives
Due to the COVID-19 pandemic, Congress created several charitable giving tax incentives, included in the CARES Act (March 2020) and the Consolidated Appropriations Act (December 2020). Read below for a highlight of these provisions, which are scheduled to expire at the end of 2021. As always, please consult with your professional advisors to determine how you can best utilize these provisions. Note that these incentives are temporary and scheduled to expire at the end of 2021, so hurry and talk to your tax advisor today!
For the 2020 and 2021 tax years, you may be able to deduct cash gifts to most public charities to offset as much as 100% of your adjusted gross income (AGI). The election is available separately for each cash contribution made.
This 100% limit allows generous donors to possibly reduce their federal income tax to zero. Gifts to private foundations, donor advised funds (DAFs), and supporting organizations (SOs) are not eligible for this special election. Donors are eligible to carry forward unused cash contribution deductions for up to five additional years. Please ask your professional advisor if deducting up to 100% of your AGI would be tax-wise for your specific circumstances.
Do you itemize? If you won't itemize your taxes in 2021, you can still reduce your taxable income by up to $300 (or up to $600 for married couples who file jointly) for cash contributions to public charities. By using a "below-the-line" adjustment you may be able to reduce your taxable income.
If you are 70.5 or older, qualified charitable distributions (QCDs) from your IRA remain a great way to make charitable contributions! A QCD allows you to make tax-free gifts, up to $100,000 a year, to charities and satisfy your required minimum distribution (RMD). The CARES Act suspended the required distribution of most retirement plans for 2020 only, this provision does not appear to have been extended into 2021. Please contact us and your professional advisor to learn about how you can make tax-advantaged contributions in this way.
The Community Foundation is eager to help you reach your chairtable goals and create a charitable gift plan that works for you! Please feel free to contact Teri McNally, firstname.lastname@example.org or Emma Miller-Richards, email@example.com.
Learn about 10 reasons advisors recommend establishing a fund at The Community Foundation rather than creating a private foundation.