CARES Act and Giving - Greenwich Hospital Office of Development

CARES Act and Giving

The CARES Act in 2021

Legislation known as the CARES Act, was signed into law in 2020.  The Consolidated Appropriations Act of 2021 continued many of these programs by adding new phases, new allocations, and new guidance to address issues related to the continuation of the COVID-19 pandemic.  Some of these provisions are relevant to charitable giving.

Higher Deduction Limits

As in 2020, in 2021 individuals are entitled to a 100% income tax charitable deduction for cash gifts to the extent of their adjusted gross income.  The 100% deduction offers a huge potential tax benefit.  It is possible to shelter your entire AGI from tax in 2021 with direct cash contributions to qualified public charities.

Charitable Deduction for Non-Itemizers

Taxpayers who take the standard deduction rather than itemizing their deductions can claim a $300 above-the-line charitable deduction in 2021. Those who are joint filers can claim a deduction of up to $600 for gifts made in 2021. Those who do itemize may continue to claim an income tax charitable deduction subject to applicable limits.  This provision is permanent.

Required Minimum Distribution Restored in 2021

Those who turn 72 during 2021 (increased from age 70½) must take their required minimum distribution (RMD).  While the RMD was waived in 2020, the rules regarding required minimum distributions were reinstated and RMDs are required for 2021.

Contact Us and Your Advisors

Some extensions of the CARES Act are permanent such as the above-the-line charitable deduction for non-itemizers and the reinstatement of the RMD requirement.  The 100% limit on cash gifts to the extent of income is for 2021 only.  Act now to ensure you can take advantage of this tax-smart giving opportunity by year end.  Consult your advisors about these provisions and contact us if we can help you with any gift-planning opportunities.