Fall is in the air. Weekends are filled up with craft fairs, corn mazes, and calling the HOGS! In addition to these traditions, autumn is also a season for philanthropy.
Did you know that most nonprofits raise 50% or more of their annual revenue between Thanksgiving and December 31st? This support is critical, as many agencies offer additional programs and supportive services for families throughout the holidays.
As a donor, the end of the year can be an important time for you as well. Here are few things to keep in mind as you prepare for the end of the year:
EXTENSION ON INCENTIVES IN THE CARES ACT
- An increased adjusted gross income (AGI) deduction limit—For those who itemize, the AGI limit is increased from 60% to 100% for cash contributions to charities (excluding donor-advised funds and supporting organizations) made in 2021, with a 5-year carryforward for contributions that exceed 100% of AGI. For corporations, the limit on deductions for contributions, ordinarily 10 percent of AGI, is elevated to 25 percent for 2021.
- A universal deduction of up to $300— Taxpayers who do not itemize can receive an “above-the-line” deduction for cash contributions made to charities (excluding donor-advised funds and supporting organizations) in the 2021 tax year. This is limited to each “tax-filing unit” so married couples who file jointly can only deduct $300. All taxpayers are eligible, even people who use the standard deduction. Make a gift directly to charities of choice, or help support an array of nonprofits through our Giving Tree Funds.
OTHER TAX-SMART STRATEGIES
- Establish or ADD TO a Fund. Community Foundation funds provide a simple, efficient giving solution, allowing you the opportunity to take immediate action or create a long-term difference. The charitable gift deductions in the CARES Act exclude donor-advised funds, but donors can direct gifts through other types of Community Foundation funds (like a designated fund) for the maximum tax benefit. Learn more about Community Foundation fund options.
- Donate an appreciated asset. Instead of selling an appreciated asset, you can receive a tax deduction based on the asset’s market value and avoid capital gains taxes. The gift can then be used to benefit the causes and organizations you care about most. Learn more about all the assets you can use for charitable giving.
- Utilize an IRA Qualified Charitable Distribution (QCD) to make charitable donations. If you are age 70 ½ or older, you can use a QCD to direct up to $100,000 each year to qualified charities without treating the distribution as taxable income. Making a QCD allows itemizers and non-itemizers alike to donate in a tax efficient manner. This is particularly smart if you claim the standard deduction and would miss out on writing off charitable contributions. Learn more about IRA QCDs.
- Stack multiple years of charitable contributions in one calendar year. In order to exceed the standard deduction in a given year, you can “bunch” donations to receive maximum tax benefits. And by using a Community Foundation charitable fund, your gifts are tax-deductible, the assets can be invested, and charitable dollars can grow tax-free. You can use those assets to provide ongoing support for your favorite nonprofits, even in the years you claim the standard deduction.
MAKE IT A TRADITION
Many families have made it a tradition to give thanks by giving back. We’d love to help you be thoughtful and intentional in teaching generosity to your children and grandchildren. Contact Ashley or Jody to learn more about our customized, generational giving services. We’re proud to be your partner in philanthropy!