Charitable donations of cash may offset large portions of taxable income. The 2021 tax year will likely be the last year to elect to use a charitable donation of cash to offset 100% of adjusted gross income. This may provide an opportunity for taxpayers who are in a position to make a significant charitable gift.

With continued market changes and possible increase to the capital gains tax rates, charitable donations of appreciated assets are more valuable than ever. By making a year-end gift of stock  the donor receives not only a deduction but also the potential of avoiding higher capital gains tax.

For donors over the age of 70.5 the IRA charitable rollover can satisfy a Required Minimum Distribution without incurring income tax, even without itemizing deductions.

For others who have reached the age of 59.5 and can withdraw from a retirement plan without penalty, cash contributions can offset 100% of adjusted gross income.  This year you may withdraw cash in any amount from an IRA, 401(k), or other retirement plan and offset the income with a cash contribution.

You may also consider creating or donating to a Donor Advised Fund for maximum flexibility.

Donor Advised Funds are especially beneficial because while you receive your deduction today, you can make a long-term and significant donations over time. You may find more information about Donor Advised Funds here.