CARES Act Tax Update
A couple of key provisions of the CARES (Coronavirus Aid, Relief, and Economic Security) Act may impact your giving this year. Here are three takeaways you need to know.
- 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.)
- The return of the required minimum distribution (RMD)
After being suspended in 2020, the required minimum distribution is back in 2021. That means those who are 72 or older must take distributions from their IRA each year. If you do not need that income for daily expenses, consider using yours to make a tax-free gift to support AFSC.
We Can Help!
Contact Alyssa Chatten at GiftPlanning@afsc.org or 888-588-2372 to learn more about the renewed and expanded tax incentives for 2021.