For many reasons 2021 is another year to reflect upon. While you may want to forget many things about
it, you should keep in mind from a charitable perspective that 2021 has extended several unique
charitable giving options that will expire at the end of the year.
The Consolidated Appropriations Act (CAA) extended numerous provisions contained in the CARES ACT from 2020. These provisions included temporary tax changes that allowed donors to support charities at a lower cost to them.
The CAA extension allows donors who itemize to deduct cash contributions up to 100% (formerly 60%) of their adjusted gross income (AGI). For example, if your AGI is $100,000, you may deduct $100,000 in charitable contributions and wipe out your income tax liability entirely. This provision helps both the donor and the Club. The donor receives a larger tax deduction, and the Club receives a larger gift (allowing the Club to impact more kids in the community).
The CAA extension allows taxpayers who do not itemize their taxes (90 percent do not), to deduct a cash gift of up to $300 for those filing single and is enhanced to $600 for those married filing jointly this year in charitable donations. Since this is the universal “above-the-line” deduction, you do not have to file Schedule A (itemize) to claim it.
In addition to the CAA extension charitable giving strategies, don’t forget other popular year-end giving opportunities! First, consider donating an appreciated stock which would bring you a larger deduction, as compared to a cash donation. Here’s how: if you sell a stock, you will be subject to capital gains taxes, leaving you with a reduced value. However, if you gift the stock directly to our Club, you will avoid the capital gains tax and receive a full tax deduction for the gift.
Second, for retirees 70½ and older, you have the option to transfer funds directly from your IRA to our Club by making a Charitable IRA Rollover and/or Qualified Charitable Distribution (QCD). These pretax gifts are far better for you as a donor as compared to giving directly from your checking account. Also, once you turn 72, you can make a Charitable IRA Rollover to satisfy your Required Minimum Distribution (RMD) and avoid paying more in income taxes.
Finally, another popular strategy for those individuals that have set up a Donor Advised Fund (DAF) is to give from your DAF account to our Club. The funds in your DAF are already set aside for charity, so making a gift to our Club at the end of the year is a great way to finish strong and make an impact!
All of these giving strategies each have their own advantages, and the best one for you is going to depend on your particular situation. As always, please consult your professional advisors to make the right decision.
To learn more about fulfilling your year-end goals and assisting our mission at the same time, please contact us at 423-559-8299 or jduggan@bgcocoee.org
Jay is the founder and CEO of Launch Legacy Consulting, LLC. He has over twenty-six years’ professional experience, sixteen in the financial services industry as a financial/insurance advisor for individuals, families, businesses, nonprofits and school systems.
Disclaimer: This communication does not constitute legal, tax, or financial advice, which we do not provide. Please consult professional advisors concerning the legal, tax, or financial consequences related to your charitable planning.
