You may already know this, but the 2020 Coronavirus Aid, Relief, and Economic Security Act enhanced tax benefits for charitable giving.  You may not know that those benefits were extended into 2021 by the Consolidated Appropriations Act (CAA).  There are tax benefits for charitable giving that apply to everyone, whether you itemize or not. 

Here is a Summary:

For individuals who do not itemize deductions: “Above-the-line” deductions of up to $300 may be taken for individuals and $600 for married couples.

For individuals who itemize their deductions: Donors may contribute and deduct up to 100% of their adjusted gross income (AGI). Formerly, it was 60%. If the contribution exceeds 100% of AGI, the excess may be carried forward for up to five years.

Formerly, corporations were only able to deduct charitable contributions up to 10% of their taxable income. The CARES Act increased the limit to 25%.

To qualify, certain conditions must be met:

  • Contributions must be cash. Goods (like clothing, furnishings, etc.), real estate, stocks, etc., do not qualify.
  • Contributions must be made to an operating charity. This excludes contributions made to a Donor Advised Fund at a foundation, supporting organizations, and most family, corporate and private foundations.  It includes public charities and certain private operating foundations.

The Act also increased the penalty for over-valuing contributions from 20% to 50%.

Don’t let this opportunity for enhanced tax benefits for your charitable giving go unused. You have until December 31, 2021, to take advantage of them!  For more information contact McDaniel – Knutson Financial Partners.

This post was written by Wayne McDaniel, Chief Financial Officer of McDaniel Knutson Financial Partners. He and his wife, Jude, are generous donors and champions for Insight Women’s Center‘s mission and work.