Expanded Tax Benefits for Charitable Giving
Recent legislation includes several provisions as well as extensions from the CARES Act to help individuals and businesses who give to charity. The new law generally extends a few temporary tax changes through the end of 2021.
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Are you itemizing deductions?
Taxpayers who itemize can generally claim a deduction for charitable contributions to qualifying organizations. The deduction is typically limited to 20% to 60% of their adjusted gross income (AGI) and varies depending on the type of contribution and the type of charity. The law now allows taxpayers to apply up to 100% of their AGI, for calendar-year 2021 qualified contributions. Note, the 100% limit is not automatic; the taxpayer must choose to take the new limit for any qualified cash contribution. |
Not itemizing?
The CARES Act allowed for an additional, “above-the-line” deduction for charitable gifts made in cash of up to $300. This provision is extended into 2021 for taxpayers filing single/separately. New in 2021 is an additional “above-the-line” deduction for those married filing jointly. Joint filers (who aren’t itemizing) will be allowed to take an above-the-line deduction of up to $600 in contributions to charity this year. |
Wondering about your Giving Account?
Both of these incentives apply only to cash contributions to charities and do not apply to contributions to supporting organizations or public charities that sponsor donor-advised funds. However, there have been no changes to existing deductions for contributions made into a donor-advised fund like your Giving Account. This means you are still able to deduct up to 60 percent AGI in cash and up to 30 percent AGI in appreciated assets contributed to a donor-advised fund.
Existing carry-over rules still apply, so if your donations in 2021 exceed your AGI deduction limits, you may carry forward excess deductions for up to five subsequent tax years. As always, donors should consult with their tax and legal advisors when considering their charitable giving.
Interested in corporate giving?
The AGI limit for cash contributions remains increased for corporate donors from the 2020 CARES Act. In 2021, corporations can deduct up to 25 percent of taxable income (formerly 10 percent prior to the CARES Act).
Both of these incentives apply only to cash contributions to charities and do not apply to contributions to supporting organizations or public charities that sponsor donor-advised funds. However, there have been no changes to existing deductions for contributions made into a donor-advised fund like your Giving Account. This means you are still able to deduct up to 60 percent AGI in cash and up to 30 percent AGI in appreciated assets contributed to a donor-advised fund.
Existing carry-over rules still apply, so if your donations in 2021 exceed your AGI deduction limits, you may carry forward excess deductions for up to five subsequent tax years. As always, donors should consult with their tax and legal advisors when considering their charitable giving.
Interested in corporate giving?
The AGI limit for cash contributions remains increased for corporate donors from the 2020 CARES Act. In 2021, corporations can deduct up to 25 percent of taxable income (formerly 10 percent prior to the CARES Act).