In the final week of December 2020, Congress signed into law the Consolidated Appropriations Act, 2021, which extended and enhanced incentives in last year’s Coronavirus Aid, Relief, and Economic Security (CARES) Act for making charitable contributions.
What this means is that, once again, the universal charitable deduction is available to you if you don’t itemize your tax deductions. For those filing single or separately, you can take a deduction of up to $300 for cash donations made to charities such as PETA. New for 2021—joint filers can deduct up to $600 for cash contributions. In both cases, the deduction reduces taxable income.
If you will itemize for 2021, the 60% of adjusted gross income (AGI) limitation on cash contributions continues to be suspended and deductions can be taken up to 100% of your AGI. Again, only cash contributions made in 2021 to public charities will qualify. (Donor-advised funds do not qualify.) This allows PETA supporters to limit—or even eliminate—taxable income in 2021 by making sufficient cash donations. For example, if you hold depreciated stock, you can sell it, make a cash gift of the proceeds, and deduct the donation up to 100% of your AGI. Although this provision can be beneficial to many people, it’s important to consult your tax adviser to determine whether taking the 100% election meets your tax needs.
The CARES Act waiver of required minimum distributions (RMDs) from retirement plans was not extended into 2021. Therefore, if you’re 70.5 years of age or older—and particularly if you don’t itemize your tax deductions—you may find that you could benefit from making a qualified charitable distribution (QCD) to PETA this year from your IRA. In addition to supporting our vital work for animals, a QCD can also help fulfill your RMD and reduce your taxable income.
If you’re interested in seeing whether these important opportunities can help you assist animals this year, we recommend speaking with your financial or tax adviser. You can also write to us at [email protected]. We’re vigorously pursuing every avenue to advance PETA’s work in order to stop the exploitation and abuse of animals, and we’re grateful to have you on our side.
