At the end of March 2020, Congress passed the CARES Act for nonprofits. It was the first time Congress has passed this type of giving incentive in response to disaster or national emergency.
The inclusion of an expanded charitable giving incentive is a significant acknowledgement by Congress that the work of nonprofits like Greater Albuquerque Habitat for Humanity are essential services. During the continuing pandemic those that are already struggling feel it the most. Now, more than ever, your gift is needed to support families in need of a safe and affordable home.
CARES Act Deductions for 2021
The Consolidated Appropriations Act of 2021 HR 133 allows for the continuation of the 2020 $300 per taxpayer deduction in annual charitable contributions for non-itemizers and it allows for a $600 deduction per other returns.
To qualify, you must give a donation to a qualified charity. A donation to a donor-advised fund (DAF) does not qualify for this deduction.
Required Minimum Distributions
RMD’s (Required Minimum Distributions) were waived in 2020 by the C.A.R.E.S. Act, but are not waived in 2021. Note: RMD’s for new retirees are not required until age 72, but, you may still make a QCD (Qualified Charitable Distribution) starting at age 70 ½. This may be a tax advantage if you don’t need your IRA to live on. You can make a QCD starting at age 70 ½, and reduce the amount remaining in your IRA. This will reduce future RMD’s because the balance in the IRA (which is used for the RMD calculation) will be smaller, and thus lessen your tax burden on future required minimum distributions.
Charitable Deduction Limits
Also part of the bill, individuals and corporations that itemize can deduct much greater amounts of their contributions. Individuals can elect to deduct cash contributions, up to 100% of their 2021 adjusted gross income, on itemized 2021 tax returns. This is up from the pre-2020 limit of 60%. Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%.
The new deduction is only for cash gifts that go to a public charity. If you give cash to, say, your private foundation, the old deduction rules apply. And while the organizations that manage DAF’s are public charities, you do not get the higher deduction for donating cash to your DAF. These new limits do not apply to gifts of appreciated stock.
If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.
Donors utilizing the above federal tax advantages can also qualify for the state tax credits described below.
This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.
Did you know that donors who support Greater Albuquerque Habitat for Humanity can take advantage of a generous state tax credit?
State Tax Credits for donors who support affordable housing
The State Tax Credit Program provides tax credits to individuals and businesses making donations to affordable housing projects approved by the New Mexico Mortgage Finance Authority (MFA). Greater Albuquerque Habitat for Humanity state tax credits are currently available for monetary donations focused on State approved projects. We currently offer support for tax credits for the Clifton Avenue (San Jose neighborhood) project and pass them on for donations of $1000 or more.
The Tax Credit is equal to 50% of the value of the donation and can be used as a direct credit on New Mexico State personal and corporate income tax returns.
Make a Gift
Make an online donation right now or mail a check to Greater Albuquerque Habitat for Humanity, 4900 Menaul NE, Albuquerque, NM 87110.
Donors are essential to our mission to build decent, affordable homes right here in the Albuquerque community. Habitat homes are the result of collaborative efforts by future homeowners, volunteers, corporate sponsors, individual donors, and private foundations.
“The tax credit was never a determinate of whether I would give to Greater Albuquerque Habitat, but rather an incentive that encourages me to increase my gift and make a bigger impact,” said Ron, a longtime volunteer and donor. “As a donor, it may only seem like I have helped one family, but really I have helped all the generations to come in ways we can’t realize. By helping a family purchase a home, we are changing the cycle of poverty for their children and future generations.”