Tax Benefits - Giving - McDonogh School

Tax Benefits

Starting In 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) expanded the deductibility of charitable contributions creating many benefits for taxpayers . Many of the provisions have been extended into 2021. See below for highlights and learn more here

For taxpayers who do not itemize

  • Individual taxpayers who take the standard deduction may deduct charitable gifts up to $300. Married couples who file jointly can deduct charitable gifts up to $600.
  • Donations must be in cash. This does not apply to contributions of property, marketable securities, real property, or otherwise.
  • The donation must be to qualified charities such as McDonogh School. Donations to donor advised funds or most private foundations will not qualify.

For taxpayers who itemize

  • Individual taxpayers who itemize their deductions may now deduct certain charitable contributions up to 100% of the taxpayer’s adjusted gross income (“AGI”). Prior to the CARES Act, taxpayers were limited to deducting certain charitable contributions up to 60% of the taxpayer’s adjusted gross income. The requirements for deductibility up to 100% of AGI:
  • Donations must be made in cash during 2021 to a public charity (not to a donor advised fund or most private foundations).
  • If a donor gives more than 100% of their adjusted gross income, the donor may carry forward excess deductions for up to five subsequent tax years; though, the enhanced deductibility is set to expire after 2021.

Required Minimum Distribution Requirements (RMDs)

  • Anyone aged 72 or older as of December 31, 2021, must take their RMD by year-end to avoid the 50% penalty, unless this is their first RMD, in which case they have until April 1, 2022. 
  • The minimum age for making a tax-free transfer from an IRA to a charity is 72, and the annual limit remains at $100,000.
  • However, the 2021 tax-year expansion to the 100 percent AGI deduction limit creates the option of withdrawing funds and contributing a larger amount to charity, plus taking a charitable deduction to offset the taxable withdrawal.

Deduction Limits for Corporations

  • If you make philanthropic gifts through your business, be advised that the contribution limit for corporations has been raised to 25% of your taxable income for cash contributions this year

Contact Your Advisors

The CARES Act is extensive and includes numerous provisions that could help you financially. Consult your tax and financial advisors about how you can maximize the benefit of your charitable gift.