Special Tax Incentives for Charitable Gifts

Congress has provided several economic incentives to help address the far-reaching effects of the COVID-19 pandemic, including additional tax incentives to encourage charitable giving.

We would like to bring to your attention special tax incentives for charitable giving enacted by Congress late last year as a part of the Consolidated Appropriations Act of 2021. Note that these incentives are temporary and are scheduled to expire at the end of 2021.

You may reduce your taxable income.

If you don’t itemize your deductions, you can still reduce your taxable income in 2021 by up to $300 (or $600 for married couples filing jointly – this is new for 2021) for contributions of cash to public charities. Here’s an example how this can benefit you: Mr. and Mrs. Smith are non-itemizers and make total charitable gifts of $700 in 2021. Under this new law, the Smith’s will be able to deduct up to $600 for 2021.

Qualified charitable distributions are still a great way to make contributions if you are 70½ or older.

A qualified charitable distribution (“QCD” or “IRA charitable rollover”) allows you to make a tax-free gift of up to $100,000 to Navian Hawaii from your IRA if you are 70½ or older. A qualified charitable distribution is a great way to make tax advantageous contributions, especially if you don’t itemize your deductions.

You may deduct gifts of cash to most public charities to offset as much as 100% of your income.

For the 2021 tax year, individuals who do itemize their deductions will be able to deduct charitable contributions up to 100 percent of their adjusted gross income, up from the 60 percent that you would ordinarily take for cash gifts. This 100% limit for itemized deductions allows donors to reduce their federal income tax to zero. If you are even more generous, you can carry forward unused cash contribution deductions for up to five years.

Because each donor’s tax situation is unique and federal income tax rates are progressive, it is not a given that it will be to your advantage to deduct 100% of your cash contributions. Please check with your financial or other professional advisors to determine whether the 100% deduction makes sense for your specific circumstances.

You have important priorities for your family and loved ones, and we know that their health and financial well-being comes first. When you’re ready, we’ll be here to help you shape a charitable gift plan that suits your needs and allows you to help us further our mission.  Please contact our Philanthropy Manager at (808) 791-8084 or email development@navianhawaii.org.

This information is provided for educational purposes only.  It is not offering professional tax, legal or accounting advice.  As always, please talk with your advisor to discuss whether this gift option might work for you.