A couple of key provisions of the CARES (Coronavirus Aid, Relief, and Economic Security) Act were extended into the new year and, in one case, increased. Here’s what the new stimulus package means for you in 2021:
TAX INCENTIVES WHEN YOU GIVE TO CHARITY
- An expansion of the universal charitable deduction for cash gifts
The universal charitable deduction has not only been extended but given a well-deserved upgrade. The new deduction is $300 for single filers and $600 for married couples filing jointly. This is available to taxpayers who take the standard deduction. This tax incentive is available for cash gifts to qualified charities (but not to supporting organizations or donor-advised funds).
- An extension of the cap on deductions for cash contributions
Contributions to public charities are generally limited to a percentage of a taxpayer’s adjusted gross income (AGI). The CARES Act lifted the cap on annual contributions for those who itemize, increasing it from 60% to 100% of AGI for 2020 and now for 2021. Any excess contributions available can be carried over to the next five years. For corporations, the law raised the annual limit from 10% to 25% of taxable income.
- IRA charitable rollover
Making a gift through your IRA is a simple process that allows you to do more with your charitable dollars. If you’ve not considered it before, see below to learn more about this opportunity to support Tri Sigma. In December 2015, Congress passed the IRA Charitable Rollover, allowing those over age 70½ to transfer up to $100,000 per year from their IRA accounts to charities like the Tri Sigma Foundation without first having to recognize the distribution as income. More recently, two newer changes in legislation may affect your charitable giving: the SECURE Act and the CARES Act. Visit here for more information.
WE CAN HELP!
Please note that the above applies to federal taxes only; state law may vary. For more information about how the extension of these CARES Act provisions may impact your specific financial situation, please consult with your tax, legal, or financial advisor(s).
We’d love the opportunity to talk with you about your giving with Tri Sigma and what this means for you. Contact Meghan Paden at firstname.lastname@example.org or at (540) 459-4212.