The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided swift relief to individuals and organizations in the midst of the global Covid-19 pandemic. In December 2020, the Consolidated Appropriations Act, 2021 was signed, which extended and updated key CARES Act provisions.
In addition to direct payment and other provisions that may benefit your family, here are several CARES Act items and other considerations related to your charitable giving.
Cash Gifts – Extended
If you are among the 90 percent of American taxpayers who take the standard deduction,
you may continue to deduct $300 ($600 for married couples filing jointly) in charitable gifts from your gross income. This above-the-line deduction applies only to cash gifts made directly to ministry; they cannot be made into a donor-advised fund.
100% Charitable Deduction – Extended
Supporters can deduct cash gifts up to 100 percent of their adjusted gross income (AGI) in 2021. Gifts made directly to charity, regardless of whether they relate to Covid-19 relief, qualify. The previous deduction limit for cash gifts was 60 percent of AGI.
Gifts from Your IRA – Updated
IRA holders over the age of 72 1/2 now have required minimum distributions in 2021 (whereas RMDs were waived in 2020). Supporters over the age 70 1/2 can still make qualified charitable distributions to ministry (which satisfy the RMD, where applicable), and this remains a very cost-effective way to give.
Corporate Gifts – Extended
Corporations can continue to deduct outright charitable gifts up to 25 percent of income rather than the previous 10 percent limit. For contributions of food inventory, the deduction limit went from 15 percent to 25 percent of income.
Stock and Other Non-Cash Assets
Giving appreciated stock, real estate or other non-cash assets remains the most cost-effective giving option since you will receive a fair market value deduction at the time of your gift and avoid capital gains on the sale of appreciated assets. If you have already made gifts of stock or other assets into a donor-advised fund, now is a great time to make distributions from your account.