Three Year-End Tax Strategies for Charitable Giving

Nov 1, 2021

At the Community Foundation of Greater Des Moines, we know there are many reasons why you give. It is our privilege to come alongside individuals, families and businesses each day to help them consider how they choose charities to support and the ways in which a charitable giving fund can provide a simple and efficient way to offer this generosity.

Just as the reasons why people choose to be philanthropic are unique, so too are the ways in which this desire to give back can provide maximum tax benefits. As we near the end of 2021, consider these three strategies to maximize impact and tax-wise planning:

  • The above-the-line charitable deduction. In 2021, taxpayers that make charitable cash gifts to public charities can report up to $300 (or $600 for married couples) as an above-the-line deduction. Why does this matter? It applies to all taxpayers – including the majority of Americans that take the standard deduction.
  • Increased limit on deductibility. A temporary modification to deduction limits allows individuals to deduct charitable cash gifts up to 100% of their adjusted gross income (AGI). This is unchanged from 2020 and is a significant adjustment from the typical limit of 60% of AGI for cash gifts to public charities.
  • Qualified Charitable Distributions. With the return of the required minimum distribution (RMD) in 2021 comes the return of one of the most powerful features of the Qualified Charitable Distribution (QCD). Individuals over 70 ½ years old can take a tax-free distribution from their IRA directly to charity and that distribution will apply toward their RMD(up to a maximum QCD of $100,000).

While Donor Advised Funds (DAFs) are specifically excluded from all three of these strategies, the Community Foundation administers a number of nonprofit funds, as well as our own Better Together Fund, all of which would be eligible recipients for these tax-conscious strategies.

To learn more about the existing nonprofit funds held at the Community Foundation and explore opportunities to support causes you care about using these strategies, contact Jordan Richardson at 515-244-0020. If the nonprofits you wish to support do not currently have a charitable giving fund with us, we can work with you to establish a fund from them so you can maximize your support to the causes you care about in a tax-wise way.