Tools for Giving in 2021
In 2020, the CARES Act activated changes to charitable giving and deductions. Some of the changes remain in 2021; however, some have changed. We’re sharing a breakdown here so you can understand which option best suits you according to your stage in life.
First, at the very end of 2020, Congress passed the COVID-19 relief bill that extends tax provisions from the CARES Act into 2021.
What this means:
- Taxpayers who do not itemize can receive an additional deduction of up to $300 (or $600 for married couples filing jointly) for cash donations made in 2021.
- The Consolidated Appropriations Act extends the AGI limit for cash donations to public charities to 100% for individuals for gifts made in 2021. Any unused deductions can be carried forward for up to five years.
Next, also in 2020, the CARES Act enabled any taxpayer with an IRA required minimum distribution (RMD) due to skip it for the year. For 2021, this waiver no longer applies, which means your IRA RMD will resume, and if you’re 72 or older, it will begin.
Fortunately, though, the law remains that if you are an IRA owner age 70½ and older, you can make a qualified charitable distribution (QCD) of up to $100,000 from your IRA to public charities, which qualifies toward your RMD.
When to consider a QCD:
1. If required to take a minimum distribution from your IRA, but don’t need some or all of the funds and would face tax liabilities if you take it as income.
2. If you would like to reduce the balance in your IRA to lower minimum distributions.
3. If you would like to make a larger charitable gift than you could with cash or other assets.
4. If you would like to establish an endowment during your lifetime to support the nonprofits you care about most.
Keep in mind, while these deductions do not apply to gifts made to our Signature Funds, they do apply to gifts to other types of funds, including endowment funds and the new Thrive Central Florida Impact Funds.
These opportunities provide options for givers at different stages of life to invest in community issues that matter. As always, consult an advisor when considering charitable strategies.
Contact Nicole Donelson, Vice President of Philanthropy, for more information via email or call 407-872-3050.