The CARES Act
The Coronavirus Aid, Relief, and Economic Security (CARES) Act may affect your charitable giving.
Opportunities for Charitable Giving in Recent Legislation
On December 27, 2020, the president signed into law the Consolidated Appropriations Act, 2021. It funds the federal budget through the end of the fiscal year, and it contains a number of items designed to provide relief to individuals, businesses, and other organizations that have been adversely affected by the coronavirus. It also funds vaccine distribution, contact tracing, and testing.
The official name for the part of the Consolidated Act that pertains to the coronavirus is the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, but it is commonly referred to by the shorthand Coronavirus Stimulus Act or Coronavirus Relief Act.
On March 27, 2020, when the serious effects of the coronavirus were becoming apparent, another stimulus bill was enacted. It was officially known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act. There were two provisions in that act that were directly beneficial to donors to charitable institutions and which have been extended by the new legislation.
If, when preparing your 2020 income-tax return, you discover that it is better to claim the standard deduction than to itemize, remember to claim the allowable charitable deduction for non-itemizers.
If you will also claim the standard deduction in 2021 and you are married filing a joint return, note that you can deduct up to $600 for cash donations.
If you have been contemplating a large cash gift, it may be better to make that gift in 2021 when you can deduct up to 100% of your adjusted gross income. This could be the best year to combine your intended gift with a conversion of a regular IRA to a Roth IRA. The usable deduction for the gift may offset the taxable income resulting from the conversion.
If you have a regular IRA and will not need all of it for living expenses, consider making your charitable gifts from it. This can satisfy minimum distribution requirements that resume in 2021.
Contact Stonehill if we can help you with any gift-planning opportunities.