Advisors’ 2021 Year-End Checklist for Charitable Giving

By Evan Lange 4 weeks ago. Advising StrategyCharitable GivingTax Planning

The end of 2021 is drawing near, and that means that year-end planning conversations with clients are on the rise. A great way to set yourself apart is to provide insight on unique ways for your clients and their families to grow charitable giving. Many of the new options available from 2020 have been carried into this year’s policies. Here are a few things you should keep in mind and share as opportunities to your families.

  1. Deduct $300 or $600 above the line.

For 2021, due to the CARES Act extension, taxpayers can deduct $300 of charitable cash gifts without itemizing. New for 2021 is that couples who file joint returns can claim up to $600 of their charitable contributions, as opposed to the 2020 limit of $300 for single and joint returns. Deductions are eligible only for cash donations made to churches and public charities that are qualified organizations. Donations to private foundations, supporting organizations, or donor advised funds are excluded.

  1. Deduct up to 100% of your income.

For 2021, taxpayers can again deduct up to 100% of adjusted gross income using charitable cash gifts. This may not be as attractive to higher income earners, but it is unique to 2021 and many clients are asking about it. These gifts must go to an operating nonprofit, so again, contributions to a donor advised fund do not qualify.

AGI Chart

  1. Make IRA gifts at age 70½ +.

IRA accounts again have a required minimum distribution (RMD) in 2021. Those age 70½ or older (72 after 2020) can still make gifts directly from an IRA to a nonprofit up to $100,000. This gift donates pre-tax dollars. The earned income is never taxed because it goes directly to the nonprofit. Read more on IRA giving here.

  1. Consider appreciated stocks, or make a charitable swap: give appreciated investments without changing your portfolio.

The markets may be volatile, but the S&P 500 has been at an all-time high. Stocks are worth more today than when the donor bought them. There are two tax benefits with donating appreciated investments. The tax deduction is the same as a gift of cash (fair market value) plus the client avoids paying capital gains tax. The key is that the asset must have been owned for a year or more.

With a charitable swap, the client donates old shares of stock and immediately purchases new shares in the same company. The portfolio does not change. But the capital gain is removed. There is no waiting period. Why? Because this is gain property not loss property. So, the “wash sale” rule does not apply.

  1. Consider bunching gifts with a donor advised fund.

The 2017 Tax Cut and Jobs Act created much higher standard deductions. Fewer people can use charitable deductions because they are not able to itemize. One way around that is to “bunch” charitable gifts.

Example: A donor puts 3 years’ worth of donations into a donor advised fund. The donor takes a tax deduction for the entire amount in that year. Because the deduction is so large, the donor itemizes in that year. In later years, the donor makes gifts to charities from the donor advised fund. This creates no tax deduction. But in those years the donor takes the standard deduction instead of itemizing.

As year-end approaches, remember that you have incredible opportunity to come together for God’s Kingdom and support the ministries serving those in need. 1 Corinthians 12:14 says “For the body is not one member, but many.”

To learn more about how your gifts can make a lasting impact at The Signatry, contact me at elange@thesignatry.com to get started.

Disclaimer: The Signatry does not provide legal, tax, financial or other professional advice. You should consult professional advisors concerning the legal, tax, or financial consequences of your charitable activities.

Evan Lange
Evan Lange Serving as President of the Midwest Region for The Signatry, Evan works with advisors, attorneys, and business owners to minimize taxes and maximize charitable giving.

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