2021 Charitable Giving Considerations

Charitable giving incentives included in The CARES Act have been extended. This may be the perfect time to connect with your clients to share a few charitable giving updates that will help them give smart and make a greater impact.

As you work with your clients during this tax season, now is a great time to consider their charitable giving plans for 2021. As COVID-19 continues to impact our community and world, nonprofit organizations continue their tireless work to meet growing and evolving needs. Nonprofit organizations will be relying on the generosity of donors for the foreseeable future to serve the people who access their programs. This may be the perfect time to connect with your client(s) to share a few charitable giving updates that will help them give smart and make an even greater impact on the community.

The charitable giving incentives included in The Cares Act have been extended through 2021 via the 2.0 version of the bill. For individuals who do not itemize, the extension includes an above the line deduction up to $300 in cash contributions to qualifying charities* for individuals, and now up to $600 for couples filing jointly.

The bill also extends for one year the increased limits on deductible charitable contributions for individuals who itemize and for corporations. For cash contributions to qualifying charities*, individuals can elect to deduct up to 100 percent of AGI (up from 60 percent), and corporations can deduct up to 25 percent of taxable income (up from 10 percent).

This incentive creates an opportunity to work with your clients on a charitable giving budget for 2021, especially because you’ll want to run calculations to determine whether clients can benefit from this incentive, or whether a client would still be better off making a gift with a different asset and/or carrying forward charitable contribution deductions into future years.

The extensions included in the Coronavirus Stimulus 2.0 bill, coupled with the general uncertainty about potential tax reforms under the new administration, mean it is wise to counsel your clients about being especially organized about their charitable giving in 2021.

*Donor Advised Funds are not eligible recipients for the above the line deduction or for the increased AGI limits, even though they are public charities. However, any other fund at CFHZ is eligible for either strategy, including establishing a designated fund.

As always, we are here as a partner to help support your client’s charitable goals. Contact Colleen Hill, Vice President of Development & Donor Services, via email or by calling 616–994–8853.