Taxes and Giving in 2020 and 2021

Taxes and Giving in 2020 and 2021

Charitable Deductions and the 2020 CARES Act (When filing for tax year 2020)

  • The 2020 CARES Act includes a provision that allows for individuals to receive up to an additional $300 tax deduction for donations made to charitable organizations, such as Global Ministries. This would be a deduction in addition to the standard deductions, and will begin for the 2020 tax year.
  • Additionally, through the CARES Act, individuals can deduct up to 100% of their adjusted gross income. Previously, individuals could deduct charitable contributions up to 60% of their adjusted gross income. Corporations can deduct up to 25% of their total income, which is increased from the previous 10% limit.

Charitable Deductions carried on for 2021 (When filing for tax year 2021)

Similar charitable deductions from the 2020 CARES Act have been extended to the  2021 tax year.

  • The $300 tax deduction for those who do not itemize and take the standard deduction will now be $300 for those filing individually and $600 for those filing jointly.
  • Again in 2021, taxpayers who do itemize can deduct up to 100% of their Adjusted Gross Income (AGI) instead of only 60% of their AGI. The deductions for corporations remain the same as well.
  • As in 2020, these gifts must be cash gifts to nonprofits. They do not apply to gifts to Donor Advised Funds or family foundations.

Charitable IRA Rollovers, the SECURE Act of 2020, and the CARES Act of 2020

Eligible taxpayers (those over 70½ years of age be) have a beneficial way to support their favorite, qualified charities, including Wider Church Ministries (WCM) and Division of Overseas Ministries (DOM) — the two fiscal entities that make up Global Ministries – through the Charitable IRA Rollover, which has been in effect permanently since 2015. These charitable gifts can replace the required minimum distributions (RMD) that are required annually.

Under the SECURE Act of 2020 the age at which taxpayers are eligible to make tax-free charitable rollovers remains 70½. However, the age at which required minimum distributions (RMD) are required has been changed from 70 ½ to 72.

Furthermore, the RMD requirement for 2020 was waived by the 2020 CARES Act. The RMD requirement is back in effect for 2021 for those 72 and over.

Therefore, if you are an IRA owner over the age of 70½, you may make charitable gifts directly from your IRA totaling up to $100,000 per year. These contributions will not be included in your adjusted taxable gross income for that year. Your IRA manager provides you with the paperwork.

To learn more about the current developments to consider in your 2020 giving please watch this clip produced by the Christian Church Foundation or this clip from United Church Funds about why now might be the right time to consider planned giving.

If you are interested in making a gift to Global Ministries (Wider Church Ministries or Division of Overseas Ministries) through an IRA Charitable Rollover, please let Global Ministries know at gifts@dom.disciples.org or (317) 713-2555 if you have any questions on this opportunity.