Posted on November 24, 2021 in

Year-End Charitable Giving

It’s that time of year again! The holidays are here, and we should all take a moment to give thanks for our blessings and for the people who are important to us. Many of us will also take this opportunity to help those who are less fortunate. The end of the year is always a great time to make charitable gifts. This year some special tax benefits make charitable giving even better.

Tax Rules for Charitable Gifts

If you itemize deductions, gifts to qualified charities are usually deductible on your federal income tax return. These deductions are subject to some limits. For cash gifts to public charities, the maximum deduction is 60% of your adjusted gross income. Deductions for non-cash donations are limited to 30% of your adjusted gross income. Lower limits for deductions also apply to certain non-public charities and private foundations. Unused charitable deductions can be carried forward.

New Rules for 2021

For gifts made in 2021, special rules make the tax benefits even better. For cash gifts to public charities made this year, the deduction limit has increased to 100% of your adjusted gross income. For those who don’t itemize deductions, last year’s CARES Act provides some help. Individual taxpayers who don’t itemize can still receive a deduction for up to $300 of charitable gifts made in cash. Married taxpayers who file a joint return can deduct up to $600 in cash contributions to charities this year. These special deductions are only available for gifts made in 2021. Be sure to make gifts before the end of the year to take advantage of these special deductions.

If you believe that making a large charitable gift is the right thing to do, don’t let tax rules stop you! For larger gifts, more sophisticated planning strategies are available. If you need help using your wealth to create a charitable legacy, contact a CPA financial planner today.

Matthew A Treskovich | CFA, CPA/PFS, CITP, CMA, CFP®, AEP®, MBA, CLU, ChFC
Chief Investment Officer