Did you know that the key provisions of the March 2020 CARES Act — Coronavirus Aid, Relief, and Economic Security Act — were extended through 2021? The Consolidated Appropriations Act, 2021, built upon the large economic relief bill which included a variety of provisions to help individuals, families, and small businesses manage financial hardships.
A couple of those provisions impact charitable giving. Just how depends on whether you itemize your deductions or not. Read a summary below, and work with your financial advisor to determine how these charitable provisions may apply to you.
For Non-Itemizers
If you take the standard deduction when you file your federal taxes, this tax law gives those filing single a $300 above-the-line deduction for cash donations. New in 2021 is an additional above-the-line deduction for those married filing jointly. Joint filers will be allowed to take an above-the-line deduction of up to $600 for cash donations this year.
What’s that mean? Your donation of up to $300 or $600 will be deducted from your adjusted gross income (AGI). This happens before you take the standard deduction. But because this deduction is limited to cash contributions, gifts to a donor advised fund and complex gifts of stock or other assets do not qualify for this deduction.
For Itemizers
For folks who itemize their deductions, you’re normally limited to deducting 60% of your AGI. This legislation waives that limit for cash donations. While there’s still a deduction limit of 100% of your AGI for the 2021 tax year, any cash donations above and beyond that may be carried over as deductions for up to five years. Because this exception is only for cash donations, there remain certain limits on deductions for other gifts, like stock or personal property. And, there are still deduction limits for contributions to a donor advised fund.
Have questions? Contact Vice President of Development and Donor Engagement Christopher D. Nelson, J.D., at 651-389-0874.
We advise you to seek your own legal, tax, and financial advice in connection with gift and planning matters. The Catholic Community Foundation of Minnesota and its staff do not provide legal, tax, or financial advice.