The charitable donations tax deduction limit for 2021 contains provisions that enable businesses to help those in need. It also helps by claiming certain deductions against their tax bills. The CARES Act, together with the stimulus package signed into law at the end of 2020, makes several provisions in regard to charitable tax incentives. Are you planning your income, expenditures, and taxes for this year? You should take careful note of the CARES Act and its stipulations. This will keep you informed of charitable donations tax deduction limits for 2021.
How much can you deduct from charitable donations for 2021?
The CARES Act and the stimulus package allow for deductions of up to 100% of your adjusted gross income (AGI). This applies to cash contributions made in 2021. If you are itemizing your charitable donations, you can receive this deduction.
Also, the CARES Act allows for other deductions if you are not itemizing your cash contributions. It allows for an additional, “above-the-line” deduction for charitable gifts made in cash of up to $300. This provision is extended into 2021 for taxpayers filing separately. Plus, it increases the deduction to $600 for taxpayers filing jointly.
Contributions to Donor-advised Funds
No changes have been made to existing deductions for contributions made to a donor-advised fund sponsor like Fidelity Charitable. So, you can still deduct up to 60% AGI in cash. Or, you can deduct up to 30% AGI in appreciated assets contributed to a donor-advised fund. Also unchanged are rules around Qualified Charitable Distributions (QCD). Surprisingly, these allow seniors over 70½ years of age to donate up to $100,000 in IRA assets directly to charity annually. Meanwhile, these donations of IRA assets would not count toward the distribution of taxable income.
Need help managing your charitable donations for 2021?
The assistance of an experienced certified public account (CPA) can help you manage your taxes, including the charitable donations tax deduction limit for 2021. Georgen Scarborough is a firm of CPAs based in Vienna, Virginia. Contact us if you need help with your taxes.