by Alisa Kim O’Neil, JD, CTFA, AEP®, CDFA®, Director of Estate & Financial Planning
As part of the coronavirus relief bill, The Consolidated Appropriations Act, 2021, signed into law by President Trump on December 27th, certain parts of the CARES Act were extended into 2021. Among the provisions included in the bill are income tax benefits for charitable gifts.
For non-itemizing taxpayers:
For 2020, taxpayers were allowed a $300 above-the-line charitable contribution deduction for cash gifts, whether filing as a single taxpayer or married filing jointly. For 2021 only, the deduction remains $300 for single taxpayers, but has been increased to $600 for married couples filing jointly.
For itemizing taxpayers:
The relief bill extended the increased limitation on charitable contributions from 60% to 100% of adjusted gross income for cash gifts to public charities. Please note that the increased limitation does not apply to gifts to donor advised funds.
For Massachusetts taxpayers, Governor Baker signed legislation in December 2020 to delay the charitable deduction for Massachusetts taxpayers until 2022. The deduction had originally been scheduled to apply for 2021. Instead, beginning on January 1, 2022, Massachusetts will allow individuals to claim a charitable contribution deduction against their Part B (wages, pensions, business, and rental income) adjusted gross income.
Unlike the federal requirement that individuals must itemize their personal deductions in order to claim a charitable contribution deduction, Massachusetts will not require the taxpayers to itemize.
Please contact your tax advisor if you feel that you could benefit from either of these updates and would like more information on how these provisions can positively impact your charitable giving this year.
If you have any questions, please contact a member of our Estate and Financial Planning Group:
Alisa Kim O’Neil – [email protected] or 617-275-0313
Kathy Sablone – [email protected] or 617-956-9712
Important: This alert does not contain any legal or tax advice. You should always consult with your attorney, accountant or other professional advisors before changing or implementing any tax, investment or estate planning strategy.
IRS Circular 230 Disclosure: Pursuant to IRS Regulations, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.