With 2021 coming to a close, don’t forget to take advantage of the CARES Act to maximize reward for your End-of-Year giving!
The CARES Act signed into law on March 27, 2020, offers significant incentives for charitable families who support the causes they care about while also gaining significant and meaningful tax savings.
Read on for an easy-to-digest summary of the CARES Act to help you make the most of your End-of-Year Giving!
New Limits on Cash Donations to Public Charities
- Individuals for 2021 may deduct up to 100% of their gross income for cash donations to public charities (up from 60%). One caveat as that these donations only apply to qualified public charities and not donor-advised funds or private foundations.
- For businesses, the CARES Act increases the deductible limit for cash donations made by C-Corporations to 25% of taxable income (up from 10%).
- Taxpayers who don’t itemize for 2021 will be able to claim a deduction from gross income for up to $300 in cash donations ($600 per couple) to public charities.
- Donations in excess of these limits will carry over to the next five tax years, with limits reverting to the 60% / 10% limit in 2021 and future years.
No change to Stock Donations or Gifts to Donor-Advised Funds / Private Foundations
There was no change in the CARES Act for the deductible gift limits of 60% for cash donations to donor-advised funds (30% for appreciated stock) and 30% for cash gifts to private foundations (20% for appreciated stock gifts). Donations to donor-advised funds and private foundations however still play an important role in effective income tax planning, especially when considering very large gifts and gifts of highly appreciated stock.