Charitable Giving in 2021
Asbury University continues to move forward with our mission of educating and equipping the next generation of servant-leaders who desire to impact the world for Christ.
In response to the current financial challenges the nation is facing due to the pandemic, Congress has enacted several tax law changes. The information below offers resources to help you with your tax planning and to offer some ideas for you to consider if you are thinking about making a gift in support of our mission during this time.
CARES Act & CAA
The Coronavirus Aid, Relief and Economic Security (CARES) Act, which became law in March of 2020, was updated through the Consolidated Appropriations Act of 2021 (CAA). Several key provisions of the law were included to encourage charitable giving.
Impact on Charitable Gifts of Cash Made in 2021
- For those who do not itemize tax returns and claim a standard deduction: The CARES Act created a temporary above-the-line charitable tax deduction for cash donations of $300 per tax filing unit, which was extended through 2021 by the CAA. The CAA update increased the deduction amount to $600 for married couples filing jointly ($300 per individual).
- For those who itemize tax returns: The cap on deductions taken for annual contributions was lifted from 60% to 100% of AGI for cash gifts made to public charities under the CARES Act. This provision was extended through 2021 under the CAA. Any excess can be carried forward for five (5) years.
- As in 2020, this deduction applies only to qualified cash contributions and does not apply to cash contributions made to donor advised funds (DAFs), private foundations or supporting organizations, or to split interest trusts like charitable remainder and lead trusts. It also does not apply to carry-over contributions.
Impact on Retirement Accounts for 2021
- The CARES Act provided a temporary waiver of Required Minimum Distributions (RMDs) for some owners of Individual Retirement Accounts (IRAs) in 2020. This waiver was not extended under the CAA. With RMDs expected to resume in 2021, individuals with IRAs who are age 72 (or 70 ½ for those who turned 70 ½ before January 1, 2020) should work with their professional advisors to determine the best strategy for managing an annual RMD or making charitable gifts directly through their IRAs.
In addition to the incentives included in the CARES Act and CAA for charitable gifts of cash, individuals may consider using highly appreciated securities to fund charitable gift annuities or charitable remainder trusts that provide income. Additionally, outright gifts of appreciated securities may potentially eliminate capital gains tax because donors can claim the fair market value charitable deduction for the tax year in which the gift is made. We recommend discussing options with your professional advisors.
Donor Advised Funds
If you have a Donor Advised Fund (DAF) and wish to help us this year, you can make a gift from your DAF to support our work without affecting your personal financial security.
Charitable Gift Annuity
If you are concerned about your financial security given the ups and downs of the stock market, you may want to consider making a gift to fund a charitable gift annuity. You might be surprised by the benefits. You can exchange your low-performing stock, CDs or cash for guaranteed, lifetime fixed payments. If you make a gift of an appreciated asset, you will not have to pay capital gains when you fund the annuity. You may also benefit from a tax deduction this year and a portion of your payments could be tax-free.
In December 2019, Congress passed the SECURE Act, limiting stretch payments to IRA beneficiaries to 10 years. If you planned to benefit your children with your IRA, your heirs will now pay higher taxes on the inheritance they receive from you. When you revisit your estate plan, consider funding a testamentary charitable remainder unitrust with your IRA balance. This plan can provide lifetime payments to your heirs and spread out the taxes on their inheritance.
If you are interested in learning more about any of these ideas, please contact us at email@example.com or (800) 888-1818, x2136. Please speak with your professional advisors for information specific to your individual situation.