Almost nine months after the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed, 2020 ended with another stimulus package, extending many of the charitable incentives implemented earlier that year. Be sure to understand which provisions have been extended and how they may influence charitable giving in 2021. Below are a few of the changes that could impact you:
Charitable Incentives for Individual Donors Extended Into 2021:
Extended through 2021 are incentives for charitable donations given by individual donors. These incentives include increased charitable deduction limits. For those who plan to itemize, the existing cap on annual contributions has increased from 60% to 100% of their adjusted gross income (AGI). Charitable contributions of up to $300 may also be deducted as an above-the-line deduction for those taking the standard deduction ($600 for those filing jointly).
What types of gifts qualify?
Contributions must be in the form of cash and only apply to charitable gifts made in the 2020 or 2021 calendar year. The incentives are not applicable for contributions made to donor-advised funds or non-operating private foundations
Required Minimum Distributions (RMD) Will Resume in 2021
In 2020 RMDs were waived for those with IRAs or other qualified retirement plans. However, the newest relief package did not extend the waiver. This means donors who are the age of 72 or older must resume taking a RMD in 2021.
Donors who are the age of 70 ½ may still choose to make a qualified charitable distribution (QCD) through their IRA up to $100,000. A QCD would be excluded from taxable income and would also lower the IRA balance for future RMDs.
Penalty-Free Withdrawal From A Retirement Plan Extends Through 2021
Those younger than 59½ will not be subject to the 10% early-withdrawal penalty for up to $100,000 from retirement plans if they qualify for COVID-related hardship. You have up to three years to pay taxes and replace any withdrawals made.
We encourage you to consult with your professional advisor to ensure you are informed of your options. If you have questions on how the CARES Act may impact your giving to Orlando Health, or if you would like to discuss tax-wise ways of giving, please contact: