Charitable Giving in 2021
The Coronavirus Aid, Relief, and Economic Security (CARES Act) provides an opportunity at the end of 2021 for unique charitable tax strategies that will sunset on December 31, 2021. Check with a financial advisor or CPA to see if any of these giving tips will help your charitable giving to Stetson Law go farther.
Above the Line Deduction
The CARES Act allowed for a deduction for charitable gifts made in cash of up to $300 even if you take the standard deduction. This provision has been extended into 2021 for taxpayers filing single/separately and joint filers who are not itemizing will be allowed to take an above-the-line deduction of up to $600 in cash contributions to charity
100% Deduction Limit
The adjusted gross income (AGI) limit for cash contributions to qualifying public charities such as Stetson Law remains increased for individual donors who itemize. For cash contributions made in 2021, you can elect to deduct up to 100 percent of your AGI (formerly 60 percent prior to the CARES Act). Individual taxpayers can continue to carry forward any excess charitable contributions for five years, but the enhanced 100 percent deduction limitation expires Dec. 31, 2021.
Cash contributions for corporate donors continue to be increased. In 2021, corporations can deduct up to 25 percent of taxable income (formerly 10 percent prior to the CARES Act). This increased percentage expires December 31, 2021.
Chatitable IRA Rollover
If you are 70½ or older and have other sources of income to draw upon, you can direct your IRA custodian to transfer a portion of your retirement assets to a public charity such as Stetson Law as a qualified charitable distribution (QCD). The donation counts as part of your Required Minimum Distribution but is not included in your taxable income.
Gifts of Appreciated Assets
For those who itemize deductions, appreciated non-cash assets held more than one year may offer an additional tax benefit in comparison to cash donations. Donors may be able to claim a deduction for the fair market value of an asset, and may be able to eliminate the capital gains tax they would otherwise have if they sold assets and made a cash gift.
If your total deductions in 2021 amount to slightly less than the standard deduction, you can consider accelerating or bundling charitable donations this year. This strategy may enable you to exceed the standard deduction, realize greater tax savings while also optimizing your charitable impact. You may be able to bundle donations with the use of both cash donations as well as gifts of appreciated non-cash assets like publicly traded stock held for more than a year. Aside from generating an income tax deduction, gifts of long-term appreciated assets may also result in capital gains tax savings. The combination of income and capital gains tax savings may significantly reduce the cost of making a charitable gift.
Crytocurrency, Life Insurance, Real Estate, or Other Assets
Consider making a gift of other assets to Stetson Law. Many of our donors make gifts of other assets to support Stetson Law. Contact us to learn more!
Always consult your professional tax and legal advisors about the suitability of any of these strategies on your personal situation and how to carry them out effectively.
If you are interested in an illustration of the potential benefits of the aforementioned strategies, please call the Development and Alumni Relations 727-562-7367 or [email protected]