CARES Act Incentives Extended for 2021 — with a small boost!
Posted January 13, 2021
The C.A.R.E.S. Act of 2020 has been extended for 2021!
Allowable deductions for donations made by December 31st, 2021 to qualified charitable organizations- including The Goathouse Refuge! – have been greatly expanded. Here’s what you need to know to take advantage of this opportunity:
Do you take the standard deduction?
The CARES Act applies a temporary universal charitable deduction for all taxpayers of up to $300. Ninety-two percent of taxpayers take a standard deduction rather than itemizing their charitable giving—under the new provision, taxpayers who do not itemize can now directly benefit from their charitable cash donations of up to $300.
Are you itemizing deductions?
The adjusted gross income (AGI) limit for cash contributions was increased for individual donors. For cash contributions made in 2021, you can now elect to deduct up to 100% of your AGI (increased from 60%). The qualifying deduction can be cash, in kind, or appreciated stock.
Charitable Transfer of Stock Gains
For those with significant stock market gains, this year’s C.A.R.E.S. Act tax break can be an especially valuable opportunity. Transferring the stock directly to The Goathouse Refuge allows our charity to enjoy the full appreciated value of the stock and the taxpayer may deduct the full value of the donated stock (and offset equivalent income) without paying the capital gains tax they would otherwise owe on the appreciated value upon the sale of the stock. Making donations of appreciated stock is easy! Simply have your broker transfer the shares of stock to:
Edward Jones DTC # 0057
Goathouse Refuge Account # 35723358-1-2
Goathouse Refuge Tax ID # 26-0893521
What about IRA Qualified Charitable Distributions (QCD)?
The QCD allows individuals over 70 ½ years old to donate up to $100,000 in IRA assets directly to charity annually, without taking the distribution into taxable income. While the C.A.R.E.S. Act did not change the rules around the QCD, remember that under the C.A.R.E.S. Act an individual can elect to deduct 100% of their AGI for cash charitable contributions. This effectively affords all individuals over 59 ½ years old the benefits similar to a QCD; they can take a cash distribution from their IRA, contribute the cash to charity and may completely offset tax attributable to the distribution by taking a charitable deduction in an amount up to 100% of their AGI for the tax year.
Alas, all of the above opportunities are available only for donations made by December 31, 2021. Be sure to speak to your accountant or tax advisor now to maximize your charitable donations to The Goathouse Refuge or the charity of your choice!
