Consolidated Appropriations Act 2021 (CAA) and Your Charitable Giving
February 3, 2021
In an effort to provide continuing COVID-19 relief for American citizens, businesses and nonprofits, in December 2020 Congress passed the Consolidated Appropriations Act 2021 (CAA). The CAA replaces the expired CARES Act, which was passed in March 2020 to address economic hardship during the coronavirus pandemic. While many of your charitable giving options and opportunities have not changed with enactment of the CAA, there are a few key points to note:
The CAA continues the CARES Act provision to allow full tax deductibility for all cash gifts up to $300 regardless of whether you itemize or not, and CAA expands it to $600 for married couples filing jointly. For individuals who do itemize, cash gifts to qualified charities, like Drexel University, are now tax deductible up to 100 percent of your adjusted gross income (up from 60 percent in previous years).
The RMD Is Back
The CARES Act waived required minimum distributions (RMD) for the 2020 tax year, but that waiver has not been extended. However, donating all or part of your RMD directly to Drexel offers a great tax-saving opportunity! Your gift (up to $100,000) will count as your RMD for the year but won’t be included in your adjusted gross income (AGI), which will lower your income tax liability and help you avoid the Medicare high-income surcharge.
Other Strategic Giving Options
Donor-Advised Fund: Distributing funds already in your donor advised fund (DAF) doesn’t affect personal financial security, so you can give to Drexel without worry.
Bequests: Designating Drexel University as the recipient of a specific amount or percentage has no impact on you now, but will have a large impact on Drexel later.
Charitable Beneficiary: Naming Drexel as a beneficiary of a life insurance policy, 401(k), or other retirement account is always an easy way to plan a gift.
Charitable Gift Annuity (CGA): A CGA allows you to support the college, school or program at Drexel that means the most to you, while still supporting yourself and/or your loved ones with a guaranteed stream of income for life.
Contact David Toll, JD, senior associate vice president, in Drexel University’s Office of Gift Planning at (215) 895-1882 or email@example.com.