Charitable Giving Under the CARES Act

In 2020-21, COVID-19 has affected millions of Americans and small businesses. This has resulted in significant federal aid and private donations towards the relief effort. If you personally donated to a charity during 2021, then you may qualify for a new deduction under the CARES Act. The CARES Act outlines the following changes to charitable giving:

• A new temporary deduction in 2021 up to $300 for single filers, $600 for married-filing-jointly taxpayers.

• Even if you have not itemized your charitable giving in the past, your cash donation will now count as an “above the line” deduction on your 2021 tax return.

• For taxpayers that still itemize their deductions, the adjusted gross income limit for charitable gifts of cash was increased from 60 percent to 100 percent.

• For a corporation, the adjusted gross income limit increased from 10 percent to 20 percent of the business’ 2021 taxable income.

• Taxpayers can make donations via cash, check or credit card by December 31, 2021. Recordkeeping rules still apply for charitable gift deductions, such as receipts or donation letters from the organization.

• The deductions above are limited to donations to 501(c)3 public charities.

Additionally, those 72 and older in 2021 may still give retirement assets to charity through an IRA Qualified Charitable Distribution (QCD). And, those between the ages of 59 ½ and 72 in 2021 may give to charity after they have received their annual distribution. This is an excellent strategy for itemizers. Contact your investment advisor and/or tax professional to see if this makes sense for you.

If you have already donated to a public charity in 2021, make sure you received supporting documentation for the donation. If you have yet to donate, or have questions, staff at MPACF would be happy to help.