To help address the impacts of the COVID-19 pandemic on our lives, businesses, and nonprofit communities, Congress has extended—and in some cases enhanced—several temporary tax incentives to encourage philanthropic giving. The Consolidated Appropriations Act of 2021 replaces the expired CARES Act. We are pleased to share these highlights.
for non-itemizers. cash gifts.
The new act continues the provision to allow full tax deductibility for all charitable cash gifts up to $300 (regardless of whether you itemize or not) and expands the deduction of charitable cash gifts to $600 for married couples filing jointly. To reiterate, this deduction is an “above-the-line” deduction—it is subtracted from one’s gross income. Please note: donations to Donor Advised Funds do not qualify.
for those who itemize. cash gifts.
For individuals who itemize, cash gifts to charities in 2021 are tax deductible up to 100% of ones adjusted gross income (AGI).
for corporate donors. cash gifts.
The AGI limit for cash contributions also remains increased for corporate donors. In 2021, corporations can deduct up to 25% of taxable income.
IRAs—qualified charitable distributions and required minimum distributions.
The suspension granted in 2020 to taking a Required Minimum Distribution appears to be terminated. We advise you check with your IRA administrator for further details. Please note that if you are philanthropically minded and 70½ years old, there are still powerful tax incentives for making charitable gifts from your IRA.
- Qualified Charitable Distributions (a QCD) are excluded from taxable income whether one takes the standard deduction or itemizes deductions. (If you are still contributing to your IRA at 70½, there is a twist: the amount one contributes to the IRA after reaching age 70½ will reduce dollar-for-dollar the amount of a QCD that can be excluded from your taxable income.)
- Once a donor reaches 72 and commences taking a required minimum distribution (RMD), a QCD can count towards the RMD.
- A QCD can be up to $100,000 per year and needs to be made directly from one’s IRA.
IRAs—make Natural Lands the beneficiary. yet another tax-wise move.
Beyond making an immediate impact gift, an IRA can be used to establish a planned gift.
You can make Natural Lands the beneficiary of your IRA (or other retirement plan). It costs you nothing now but will have a lasting influence on our region’s conserved landscape. Simply fill out a change of beneficiary form. Keep in mind, your IRAs and other qualified retirement accounts that pass to someone other than your spouse will be subject to income tax and possible estate tax, sometimes leaving a fraction of its original value for the beneficiary. If, however, Natural Lands is designated as your beneficiary, these assets will pass free of all taxes and will be available for use by Natural Lands in full.
Of note, Natural Lands could also be a partial beneficiary or contingent beneficiary of your retirement plan.
Also noteworthy, you can make Natural Lands the beneficiary of a savings or checking account or even an investment account.