11/29/2021
Hey my friends......you can still make charitable donations. Don't let the IRS rules change your heart for giving. If you itemize, you are going to love these rule changes, which expires on 12/31/2021. If you have any questions, IM/DM/PM me to discuss further. Janet
The IRS issued a special “tax tip” earlier this fall for generous givers like you.1 Here is the gist meant to support your giving this year:
It may not make sense for you to itemize deductions every year — that is the case for many givers. But shouldn’t the tax code give some credit to your gifts? We think so, and thankfully Congress agreed… at least at the start of the pandemic. Right now, you can deduct up to $300 contributed to Liberty during 2021 — $600 if you are a married couple filing a joint return — even if you do not itemize and take the standard deduction.
If you do itemize deductions, this is for you. Usually, your eligible gifts cannot exceed a specific fraction of your income. But for gifts in 2021, you can generally elect to claim a charitable deduction for cash donations up to 100 percent (up from a 60% cap) of your adjusted gross income.
If you run a business, there are incentives for you, too. The deduction thresholds for cash and food donations for many businesses have temporarily increased depending on your status as a corporation, sole proprietorship, and so forth. For example, the charitable donation deduction for corporations of up to 10% of taxable income has been lifted to 25%.
These incentives are slated to end this year, so please consider taking advantage of these opportunities before December 31.
One more idea for those who are 72 or older concerning the annually required minimum distribution from your IRA or 401K. You can reduce your tax bill by making a distribution from your IRA directly to a non-profit. This can satisfy the required annual minimum distribution without resulting in taxable income. It’s effectively another way to qualify for a charitable tax benefit — whether you itemize on your taxes or not. For example, when you take the RMD you gain no tax benefit and you pay taxes on that amount. However, if you gave it directly from your 401K or IRA to a non-profit, you pay no taxes and the non-profit pays no taxes. You met your requirement. If you are taxed at 12% federal and 6% state, you could save between $1800 to $2800 in taxes depending on your tax bracket. It did not cost you anything, but saved you on your taxes. Contact your tax accountant or financial advisor to find out more.
