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How the CARES Act and the IRA Rollover Can Aid Your Charitable Giving and Taxes in 2021

The CARES Act includes changes to charitable income tax deductions that may make it advantageous for you to pledge or increase your support to ZERO TO THREE.

In December 2020, Congress signed another stimulus package to help our nation recover from the far-reaching impacts of COVID-19. This package extended many of the charitable giving tax incentives enacted by the CARES Act in March 2020 and provided additional tax incentives for charitable giving.

  • If you are itemizing your deductions, and giving a cash contribution, you can continue to elect to deduct your charitable giving in a total of up to 100 percent of your AGI. This is the same as 2020 and is an increase from the 60% allowed prior to the CARES Act.
  • If you are not itemizing your deductions and taking the standard deduction, the CARES Act allows for an “above-the-line” deduction for charitable gifts of cash up to $300. This benefit remains for 2021. New this year is an additional “above-the-line” deduction for those married and filing jointly. Joint filers who are not itemizing their deductions can take an “above-the-line” deduction of up to $600.

Donors over the age of 70½ can give directly to charities from their IRA through a Qualified Charitable Distribution (“QCD”, or “charitable rollover”) in amounts up to $100,000 annually without taking the distribution(s) as taxable income.

Since the CARES Act allows filers who itemize deductions to claim their charitable giving as a deduction in an amount up to 100% of their AGI, donors over the age of 59½ can also give from their IRAs as a Qualified Charitable Distribution and enjoy tax benefits. Donors over the age of 59½ can take a cash distribution from their IRA in an amount up to 100% of their AGI, contribute that cash directly to a charity, and then offset the income taxes attributed to their IRA distribution by deducting their charitable distribution as a donation.

For more information on how these giving strategies can affect you and your charitable giving, we urge you to contact your tax advisor. ZERO TO THREE and its staff are not professional tax advisors; we are glad to share the above information with you but also encourage you to contact your financial/tax advisor or accountant to determine how these provisions may impact your charitable giving and tax situation.


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