The CARES act allows households up to a $600 tax deduction to nonprofits on their 2021 taxes. Otherwise, since 2018, new Federal income tax laws increased the standard deduction which eliminated the tax benefit of making charitable donations for many people unless they are donating a relatively large amount of cash. There are, however, other ways to donate and get tax breaks.
Taxpayers over age 70 ½ who are making distributions from a Traditional IRA can properly reduce their taxable income by making a Qualified Charitable Distribution directly to a charitable, 501(c)(3), organization, like LIFE CARE HUMBOLDT.
Ask your tax professional about the potential benefits of the following options:
- Donors giving appreciated real estate, stock or mutual fund shares may not only receive a tax deduction for the gift but may also avoid federal capital gain tax and state income tax by gifting an appreciated asset to Life Plan Humboldt.
- Taxpayers who are taking a Minimum Required Distributions (MRD) from a Traditional IRA can reduce their taxable income by making a Qualified Charitable Distribution directly to a 501(c)(3), organization, like LIFE CARE HUMBOLDT. This option may be desirable for people required to withdraw a Minimum Required Distribution (MRD) that exceeds their anticipated living expenses for the year.
- Make larger charitable gifts! At a certain point, your total contributions to qualifying nonprofits may be high enough that itemizing makes sense. For 202, you must itemize to deduct charitable donations.
See a tax professional for more detailed planning and advice and get your end-of-year donations in place!