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COVID’s Silver Lining
New COVID relief legislation has created one of the most favorable tax environments for charitable giving in recent memory. This means 2021 is uniquely suited to allow you to make an even greater Kingdom impact. To explain why, let’s begin with a brief history lesson.
Rewind to March 2020 when Congress passed the CARES Act. You’ll remember that CARES (Coronavirus Aid, Relief, and Economic Security Act) provided relief to millions of Americans struggling during the early months of the pandemic. Lawmakers understood churches, charities and other nonprofits would likely struggle too, and they included tax incentives in the CARES Act designed to encourage charitable giving.
When it comes to taxes, there are two types of people: those who take the standard deduction and those who itemize deductions. The good news is that the CARES Act’s giving incentives apply to both.
The CARES Act allows itemizers to deduct up to 100 percent of their adjusted gross income in charitable contributions. That’s up from a maximum of 60 percent before CARES. This benefit was set to expire at the end of 2020, but thanks to an update to the CARES Act passed in December (known as the Consolidated Appropriations Act, 2021), this incentive has been extended
Why donate all of your income, you ask? Perhaps you enjoy working but don’t need the paycheck or the tax burden that accompanies it. Or, maybe your savings, investments or spouse provide enough income to meet your needs, and you’d rather use your earnings to bless others. Whatever the reason, this temporary extension of the CARES Act gives you an unprecedented opportunity to accelerate your giving.
The good news continues for taxpayers who use the standard deduction.
Prior to the CARES Act, charitable gifts generally weren’t tax deductible unless you itemized. But CARES established a provision for a new, universal deduction for cash gifts of up to $300. This universal deduction is available even if you choose to take the standard deduction. For the 2020 tax year, it’s capped at $300 whether you file your taxes singly or jointly.
New COVID relief legislation has created one of the most favorable tax environments for charitable giving in recent memory.
CARES Act charitable giving incentives are set to expire at the end of this year. While it is possible lawmakers could choose to extend these giving tax incentives into 2022, there is no guarantee, which means 2021 is your best opportunity to maximize gifts to your church or favorite ministries.
Don’t Miss This Unprecedented Opportunity
WatersEdge is ready to help you multiply your charitable giving and maximize 2021 tax benefits available through COVID relief legislation. Let us guide you to greater Kingdom impact; start a conversation with a WatersEdge giving solutions professional today.