Curious about what the charitable giving landscape looks like for 2021? As we await the passage of a possible third stimulus package and to see if the new Biden administration and Congress will take up significant tax reform, several charitable giving incentives have already been enacted for 2021 to help address the impact of the pandemic.
Here are some opportunities to consider as you plan your giving for the year:
$300 Tax Deduction for Non-Itemizers Extended and Expanded to $600 for Couples Jointly Filing
Last year, the CARES Act created an allowance for an above-the-line charitable deduction of up to $300 for individuals and households claiming the standard deduction. This allowance has been extended for 2021 to continue at $300 for individuals while expanding to $600 for married couples filing jointly. The deduction applies only for cash contributions made to qualifying 501(c)(3) charities and excludes donations to donor-advised funds, private foundations and supporting organizations.
Expanded Tax Deduction for Itemizers Giving Cash Extended
The CARES Act provision temporarily increasing the limit itemizers can deduct from their Adjusted Gross Income (AGI) for cash contributions from 60% to 100% has been extended for 2021. The deduction applies only for cash contributions made to qualifying 501(c)(3) charities and excludes donations to donor-advised funds, private foundations and supporting organizations. Taxpayers who make this 100% of AGI election can also carry forward unused qualified cash gift deductions up to five years. Talk to your tax advisor for more detail.
Cash gifts to donor-advised funds are eligible to be deducted up to the normal 60% of AGI with a five-year carryforward.
Contributions of appreciated assets held for a year or more (stocks, mutual funds, real estate, closely-held business interests, etc.) to qualified charities, donor-advised funds and supporting organizations remain limited to a deduction of up to 30% of donors’ AGI. Contributions of such assets to private foundations remain capped at 20 percent. A five-year carryforward also exists for unused qualified gift deductions of long-term appreciated assets up to their regular limits.
Corporate Tax Deduction Increase of 25% Extended
For corporations, the usual 10% gross income-based limitation remains increased to 25% during 2021 for charitable contributions made in cash to any qualifying 501(c)(3) charity, excluding donor-advised funds, private foundations and supporting organizations.
Qualified Charitable Distributions
Qualified Charitable Distributions (QCDs) remain a powerful strategy for seniors—particularly with the restoration of Required Minimum Distributions (RMDs) in 2021. Donors who are 70 ½ or older may elect to make charitable donations directly from their traditional and other types of IRAs to their favorite charities and have the donations reduce their Adjusted Gross Income (AGI). For donors who are 72 and older, these QCD donations will also count toward their annual RMD. The limit on these donations remains $100,000 per individual and $200,000 per married couple. However, with the enactment of the SECURE Act, IRA account owners must now reduce their intended QCDs by any contribution amounts made into their IRAs after age 70½ (the age cap that was put in place to make IRA contributions before the passage of the SECURE Act), to the extent they have not already been used to reduce their QCDs. Be sure to talk to your tax advisor for further guidance if you have contributed to your IRA after turning 70½ and wish to make a QCD. QCDs also may not be made to donor-advised funds, private foundations or supporting organizations. However, they are the perfect tool for donating to any number of local charities and community-focused funds here at DuPage Foundation.
Additional QCD Tip: Because RMDs are taxable, donors wishing to make QCDs should consider making them early in the year, before taking any RMDs, since QCDs taken later cannot offset taxes already incurred on RMDs.
Don’t Need Your Stimulus Check? Consider Donating It!
If you have received or will receive a stimulus check as part of the government’s COVID-19 Relief efforts and don’t need it, consider doing a world of good in your own backyard and donating it to one or more of your favorite local charities or one or more of our many community-focused funds here at DuPage Foundation. As many of our neighbors, businesses and not-for-profits continue to struggle with the devastating economic and health consequences of the pandemic, your help is needed now more than ever.
Want to Learn More? Contact Us for a Personal Consultation
DuPage Foundation is here to help. Our staff will work with you and your advisors to help you give efficiently and effectively to ensure that you SEE MORE IMPACT with your philanthropy. You can give directly through the DuPage Foundation website or you can contact any member of our Advancement Team for assistance via the main office line, at 630.665.5556, or by using their direct contact information.
The content provided above and throughout this website is for informational purposes only and should not be construed as or relied upon as legal or tax advice. DuPage Foundation does not provide legal or tax advice and recommends that you consult with your tax attorney and other members of your professional advisor team before making a significant charitable gift.