Charitable Giving and Tax Changes

In March, 2020, Congress enacted Coronavirus Aid, Relief, and Economic Security Act, or “CARES Act” which recognizes the important role non-profits like PBS Wisconsin plays during the pandemic and provides additional tax benefits for taxpayers supporting them.

As a result of the Consolidated Appropriations Act of 2021, several of these provisions were extended or expanded into 2021. To help you make informed decisions on how you can continue to support the causes you are passionate about in a way that benefits you, here are a few key provisions that may affect you and your charitable goals.

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Extension: $300 deduction for those who claim the standard deduction.

Individuals who plan to take the standard deduction for their 2021 tax returns may claim an “above the line” deduction of up to $300 for cash donations to public charities.

Expansion: $600 deduction for married couples.

For 2021, this “above-the-line” deduction is increased to $600 for cash donations for married couples filing jointly who do not itemize tax deductions.

Extension: Charitable giving deduction limit increased to 100 percent of Adjusted Gross Income (AGI) on cash donations for those who itemize.

Donors may continue to receive a federal income tax deduction for charitable contributions of up to 100 percent of their AGI for certain cash donations made during calendar year 2021. Prior to 2020, this number was 60 percent.

Extension: AGI limit for cash contributions increased to 25 percent of taxable income for corporations.

The AGI limit for cash contributions also remains increased for corporate donors. Corporations can deduct up to 25 percent of taxable income. Prior to 2020, this number was 10 percent.

Qualified Charitable Distributions are still a great way to make contributions.

If you are 70 ½ or older, you can still use your IRA to receive tax relief on giving to charities such as Friends of PBS Wisconsin. You can do so with a qualified charitable distribution (QCD) from your IRA. The funds are directly transferred from your IRA to the Friends of PBS Wisconsin and are put to use right away. A QCD generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.

To read a summary of the CARES Act, please visit:
https://gop-waysandmeans.house.gov/wp-content/uploads/2020/03/CARES-Act-Summary.pdf

Or, to read the full text of the Consolidated Appropriations Act of 2021, visit:
https://www.congress.gov/bill/116th-congress/house-bill/133/text

For additional information, please contact our Major and Planned Giving Department at 608-263-2131. Please note: this information does not constitute legal or financial advice and we encourage you to consult with your tax advisor about these strategies and whether they may be appropriate to your individual circumstances.