The CARES Act
& Charitable Giving
This year, 2021, the CARES Act offers a unique financial opportunity for people to support causes important to them, but that opportunity may be short-lived.
The CARES Act of 2020 offered tax incentives to individuals who support charitable causes. Elements of the act have been extended to 2021, and they include measures that allow for charitable deductions of up to 100% of Adjusted Gross Income (AGI) (with a few exceptions) for cash gifts made by individuals who elect to itemize deductions on their tax return.
The provisions also allow corporations to deduct charitable contributions up to 25% of taxable income.
How this can help with our
MATCHING GIFT CHALLENGE
During our End of Year giving we have been blessed with seed money from a handful of our faithful donors to help us raise funds for our year end goal. This seed money of $80,000 is being used as a Matching Gift incentive and your gift today will help us reach our goal of $160,000.
GET STARTED TODAY
Watch the full video here.
Mark D. Reitsma, CFP®, CMFC
Many thanks to Mark D. Reitsma, CFP®, CMFC of Regency Wealth Management for sharing his time and expertise to Star of Hope Ministries. Mark joined Regency Wealth Management as a Partner in 2010 after a five year affiliation with LPL Financial and five years with Waddell & Reed as a Financial Advisor. He was given the Financial Planning Excellence Award in 2003, was included in Waddell & Reed’s Circle of Champions for three consecutive years, and received the company’s top award, Crest in 2005. You can discover more about Mr. Reitsma and Regency Wealth Management at regencywealth.com
Learn MoreThe following are some highlights of how CARES Act provisions may impact your charitable contributions in the 2021 tax year.
DO YOU ITEMIZE DEDUCTIONS?
The adjusted gross income (AGI) limit for cash contributions was increased for individual donors. An individual can elect to deduct 100 percent of their AGI for cash charitable contributions. This effectively affords individuals over 59½ years old the benefits similar to a QCD; they can take a cash distribution from their IRA, contribute the cash to Star of Hope Ministries, and may completely offset tax attributable to the distribution by taking a charitable deduction in an amount up to 100 percent of their AGI for the tax year.
If you’re planning a large donation in 2021, this may be a smart strategy as long as you are between the ages of 59½ and 70½ and are not dependent on existing retirement funds.
CORPORATE GIVING
The limit for cash contributions was also increased for the year 2021 for corporate donors. Corporations can now deduct up to 25 percent of taxable income (increased from 10 percent).
IF YOU DON’T ITEMIZE – STANDARD DEDUCTION
The CARES Act allows for an additional, “above-the-line” deduction for charitable gifts made in cash up to $300 in total. If you are not itemizing on your 2021 taxes, you can claim this new deduction.
IRA QUALIFIED CHARITABLE DISTRIBUTIONS (QCD)
The CARES Act did not change the rules around the QCD, which allows individuals over 70½ years old to donate up to $100,000 in IRA assets directly to charity annually, without including the distribution in taxable income.
However, note the CARES Act provides a waiver in 2021 for those who normally would need to make a Required Minimum Distribution (RMD) from their IRA (thus allowing assets to grown in the account). As with all these matters, see your attorney, tax professional or financial advisor for the best course for you.
The tax information provided is general and educational in nature and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
~ Spencer Scott
Chief Development Officer Star of Hope Ministries
How Can We Help?We are so grateful for the incredible generosity of our support network.
Thank you everyone for your partnership as we work togethe to serve our neighbors in Paterson, Neward, Willingboro, and beyond.