Charitable Tax Incentives
The required minimum distribution (RMD) is back after having been waived in 2020. Additionally some key provisions of the CARES Act were extended in 2021. Here’s what these mean for you:
Required Minimum Distribution — Smart giving from your IRA
You can enjoy a tax savings by designating your IRA funds to St. David’s Center for Child & Family Development. Donors age 70½ and older get a tax advantage, and those age 72 and up can also use the distribution to satisfy their RMD.
- No matter your age, you can designate St. David’s Center as the beneficiary of all or a percentage of your IRA and it will pass to us tax-free after your lifetime. It’s simple, just requiring that you contact your IRA administrator for a change-of-beneficiary form or download a form from your provider’s website.
- If you’re at least 59½ years old, you can take a distribution and then make a charitable gift from your IRA without penalty. If you itemize your deductions, you can take a charitable deduction for the amount of your gift.
- If you’re 72 years or older, you can make a qualified charitable distribution, to satisfy all or part of the amount of your required minimum distribution (RMD) from your IRA directly to charity without having to pay income taxes.
CARES Act Tax Incentives Extended — With a Small Boost
A couple of key provisions of the CARES (Coronavirus Aid, Relief, and Economic Security) Act were extended into 2021 (and, in one case, increased). Here’s what the stimulus package means for you.
Tax Incentives When You Give to Charity
- 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.)