NEWS: Federal Economic Stimulus Legislation Offers Incentives for Charitable Giving
We are grateful for the generous donors who have supported our work over the years and continue to do so as the Medical Center has worked to meet the challenges of the COVID-19 pandemic. To help you make the most of your gifts, we would like to bring to your attention new tax rules for charitable giving enacted by Congress as part of the Consolidated Appropriations Act of 2021 to help address the far-reaching effects of the pandemic and provide additional tax incentives to supporters like you.
Please note: these incentives are schedule to expire at the end of 2021.
You may deduct gifts of cash to most public charities to offset as much as 100% of your income! For the 2021 tax year, you may deduct cash contributions to Vanderbilt University Medical Center to offset up to 100% of your income. Ordinarily, the income tax charitable deduction for cash gifts is limited to 60% of your income. This 100% limit allows especially generous donors to reduce their federal income tax to zero. If you are even more charitable you can carry forward unused cash contribution deductions for up to five years.
However, it may not be the tax-wise choice to deduct up to 100% of your income. Because federal income tax rates are progressive, it is not a given that it will be to your advantage to deduct 100% of your cash contributions. Check with your financial adviser to determine whether the 100% deduction makes sense for your circumstances.
If you don't itemize you may reduce your taxable income by $300 for your charitable contributions in 2021. If you do not itemize your deductions, you can still reduce your taxable income by up to $300 ($600 for married couples filing jointly) for contributions of cash to public charities using an "above the line" adjustment.
Qualified charitable distributions are still a tax-smart way to make contributions. A qualified charitable distribution (QCD or IRA Charitable Rollover) allows you to make a tax-free gift of up to $100,000 to Vanderbilt University Medical Center from your IRA if you are 70½ or older. This is a great way to make tax-advantageous contributions, especially if you don't itemize. [The CARES Act suspension of the Required Minimum Distribution from most retirement plans for 2020 does not appear to have been extended into 2021.]
You have important priorities for your family and loved ones, and we know that their health and financial well-being comes first. When you are ready, we will be here to help you shape a charitable gift plan that suits your needs and allows you to keep helping with our important work.