As 2021 draws to a close, many of our supporters are making arrangements for their year-end charitable contributions.
I wanted to make our SCI Community aware of some incentives that can help you maximize your gift. Take a look at these giving options as you consider supporting U2FP's important work.
Deduction Still Available for Standard filers.
In 2020: Up to $300 per taxpayer was allowed for an annual charitable contribution. The deduction is continued for 2021 and expanded to $600 for joint fillers. This is available only to people who take the standard deduction (for taxpayers who do not itemize their deductions). It is an “above the line” adjustment to income that will reduce a donor’s adjusted gross income (AGI), and thereby reduce taxable income. A donation to a donor advised fund (DAF) does not qualify for this deduction.
New Charitable Deduction Limits remains the same as 2020.
As part of the CARES Act, individuals and corporations that itemize can deduct much greater amounts of their contributions. Individuals can still elect to deduct donations up to 100% of their 2021 AGI. Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%. The new deduction is for gifts that go to a public charity, such as U2FP.
Make a Gift from your IRA.
Required minimum distributions (RMD) that would have had to start in 2021 do not have to start until 4/1/2022, including distributions from defined benefit pension plans and 457 plans. Making a QCD (Qualified Charitable Deduction) this year will still allow itemizers and non-itemizers alike to direct up to $100,000 from their IRA to charities in a tax efficient manner. Subsequent RMD’s will revert to a required withdrawal December 31, 2022, this may result in two withdrawals in 2022.
If you donate your stock directly to a charity, there's no capital gains tax to pay. Plus, you are still eligible to deduct the full fair-market value of the asset you donated from your income taxes, up to the overall amount allowed by the IRS.
For additional information on tax-efficient giving, check out this very insightful article from Mike Piper: What’s the Most Tax Efficient Way to Give?