The Coronavirus Aid, Relief and Economic Security (CARES) Act became law in March of 2020, and certain provisions were extended by the 2021 Consolidated Appropriations Act. The CARES Act includes provisions that impact charitable giving in 2021.

Impact on Charitable Gifts Made in 2021

  • For individuals who do not itemize deductions on their federal tax returns, the CARES Act created a temporary above-the-line charitable tax deduction for cash donations of $300 per individual or $300 per filing unit ($600 for married couples filing jointly). This deduction is only available to individuals who claim the standard deduction ($12,550 for single taxpayers, $18,800 for head of household, $25,100 for married filing jointly). 
  • For individuals who itemize, the cap on deductions for contributions has been lifted. For 2021, individuals who itemize may deduct cash gifts to public charities up to 100% of adjusted gross income. This limit is reduced dollar-for-dollar by other itemized charitable deductions, and does not apply to gifts made to donor-advised funds (DAFs). Any excess can be carried forward for five (5) years.

Impact on Retirement Accounts for 2021

  • The CARES Act also includes a temporary waiver of Required Minimum Distributions (RMDs). The waiver will allow IRA owners age 72 or older to keep funds in their IRAs and other qualified retirement plans.
  • Individuals age 70½ and older can continue to make tax-free charitable gifts directly from their eligible IRAs through Qualified Charitable Distributions (QCDs).

This, coupled with current financial uncertainty, has created an opportunity for those concerned about their income from investments. Individuals may like to consider charitable gift annuities that offer fixed and guaranteed income or other charitable vehicles that offer income streams. We recommend discussing options with professional advisors or contacting Richmond's Gift Planning team.