Take Advantage of Tax Provisions Before They Expire on December 31
Posted on October 25, 2021 by Abe Hartzler
Virginia Mennonite Missions is accredited by the Evangelical Council for Financial Accountability (ECFA), who has provided the following information for its members.
Whether you itemize deductions or not on your annual tax return, there are temporary opportunities in the tax law encouraging you to invest in our Virginia Mennonite Missions now. But those provisions are set to expire on December 31!
This is so important that the IRS actually issued a special “tax tip” earlier this fall.1 Here is the gist (in plain English) of the benefits meant to support your giving this year:
- It may not make sense for you to itemize deductions every year — that is the case for many givers. But shouldn’t the tax code give some credit to your gifts? We think so, and thankfully Congress agreed…at least at the start of the pandemic. Right now, you can deduct up to $300 contributed to VMMissions during 2021 — $600 if you are a married couple filing a joint return — even if you do not itemize and take the standard deduction.
- If you do itemize deductions, this is for you. Usually, your eligible gifts cannot exceed a specific fraction of your income. But for gifts in 2021, you can generally elect to claim a charitable deduction for cash donations up to 100 percent of your adjusted gross income (consult your tax professional or read the IRS update noted below for limited exceptions).
- If you run a business, there are incentives for you, too. The deduction thresholds for cash and food donations for many businesses have temporarily increased depending on your status as a corporation, sole proprietorship, and so forth. It is definitely a benefit to explore with your accounting team.
Again, these incentives are slated to end this year, so please consider taking advantage of these opportunities before December 31.
Finally, one more idea that is not in the IRS tax tip but is worth considering. You might reduce your tax bill by making a distribution from your IRA to VMMissions. This can satisfy the required annual minimum distribution for taxpayers age 72 or older, while not resulting in taxable income. It’s effectively another way to qualify for a charitable tax benefit — whether you itemize on your taxes or not! Consult your financial advisor or accountant to see if this may benefit you.
To donate stocks, or make a contribution through an IRA or Donor Advised Fund please contact Abe Hartzler
1 See “Expanded tax benefits help individuals and businesses give to charity in 2021”, Sept. 28, 2021, https://www.irs.gov/newsroom/expanded-tax-benefits-help-individuals-and-businesses-give-to-charity-in-2021