How CARES Act Extensions Affect Your 2021 Charitable Tax Deductions

To help American workers and businesses mitigate the devastating economic effects of the coronavirus outbreak, in March 2020 the government signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Included in the original CARES Act were key provisions that encouraged individuals and corporations to help nonprofit organizations providing direct services and support to those impacted by COVID-19.

As a result of the Consolidated Appropriations Act, 2021, several of these provisions were extended or expanded into 2021. They may impact your 2021 charitable tax deductions as described below.

“It is always great to see the government keep or write in law that motivates Americans to go after their charitable goals while also getting a tax benefit,” shared Lorenzo Sanchez, CFP®, Principal, Director Wealth Management at Rowling & Associates.

“Like most tax laws, these items may seem simple when examined in a silo, but you should consult with a tax professional to properly incorporate them into your short and long-term tax plan,” he shared.

Importantly, the CARES Act suspension of the Required Minimum Distributions (RMD) from most retirement plans for 2020 has not been extended into 2021.

Supporting San Diegans in Need

These federal income tax deductions do not apply for gifts made to donor-advised funds, supporting organizations and/or private foundations.

Although federal law does not permit donor-advised funds to accept gifts afforded by CARES Act charitable deductions in 2021, it does represent an opportunity for donors to support scholarship, field-of-interest or designated funds, including programs and funds at The San Diego Foundation, such as our Strategic Initiatives Fund, Black Community Investment Fund or Community Scholars Initiative.

As you continue to look for ways to help San Diegans in need, be sure to contact our Donor Services Team at (619) 814-1332 or to speak to us about your year-end giving needs and to better understand how CARES Act provisions may impact your charitable contributions in the 2021 tax year.

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