Details

> Above-the-line deductions for those who take the standard deduction

Traditionally, if you take the standard deduction instead of itemizing, you are not eligible to deduct charitable contributions. Under the CARES Act, someone who takes the standard deduction may take a qualified charitable contribution deduction of up to $300 an individual ($600/couple) against their Adjusted Gross Income (AGI) in 2020 and 2021.

• This above-the-line charitable deduction must be in cash and made to a publicly supported charity, such as the CMC Foundation. Contributions to a non-operating private foundation or to a donor advised fund are not eligible.
• Lower tax brackets may not be eligible for the full $300 deduction.

> Modification of limitations on cash contributions

Under the CARES Act, you can get a Federal income tax deduction for charitable cash contributions of up to 100% of your Adjusted Gross Income (AGI) (up from 60%). This deduction can be enhanced by a Roth IRA conversion.

• Any excess is carried forward as a charitable contribution in each of the next five years.
• The AGI adjustment is for gifts to public non-profits, such as the CMC Foundation. Contributions to non-operating private foundations or donor advised funds are not eligible.

> For corporations

The CARES Act temporarily increases the limitation on the deductibility of cash charitable contributions during 2020 from 10% to 25% of a corporation's taxable income.

> Retirement Accounts and Required Minimum Distributions

The CARES act temporarily waived required minimum distributions (RMDs) for all types of retirement plans (including IRAs, 401(k)s, 403(b)s, 457(b)s, and inherited IRA plans) for calendar year 2020, including the first RMD, which individuals may have delayed from 2019. The CARES Act expired at the end of 2020. Individuals that qualify to take an RMD must begin their withdrawals either again, or for the first time, in 2021.

The deadline for taking RMDs is December 31 each year. If you have an IRA, you may delay taking your first RMD (and only your first) until April 1 of the year after you turn 72. If you choose to delay your first RMD, you'll have to take your first and second RMD in the same tax year. To understand how delaying your first RMD impacts your taxes and future RMDs, please contact your financial advisor.

For your workplace retirement accounts, if you are still working and don’t own more than 5% of the business you’re employed by, you may be able to delay taking an RMD until April 1 of the year after you retire. Keep in mind, this rule does not apply to IRAs or plans with companies for whom you no longer work.