Expanded Tax Benefits Help Individuals and Businesses Give to Charity During 2021
Amanda Beder • Sep 30, 2021
Deductions up to $600 available for cash donations by non-itemizers
The Internal Revenue Service today explained how expanded tax benefits can help both individuals and businesses give to charity before the end of this year.
The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted last December, provides several provisions to help individuals and businesses who give to charity. The new law generally extends through the end of 2021 four temporary tax changes originally enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Here is a rundown of these changes.
Deduction for individuals who don't itemize; cash donations up to $600 qualify
Ordinarily, individuals who elect to take the standard deduction cannot claim a deduction for their charitable contributions. The law now permits these individuals to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to certain qualifying charitable organizations. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify to claim a limited deduction for cash contributions.
These individuals, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.
Cash contributions to most charitable organizations qualify. However, cash contributions made either to supporting organizations or to establish or maintain a donor advised fund do not qualify. Cash contributions carried forward from prior years do not qualify, nor do cash contributions to most private foundations and most cash contributions to charitable remainder trusts. In general, a donor-advised fund is a fund or account maintained by a charity in which a donor can, because of being a donor, advise the fund on how to distribute or invest amounts contributed by the donor and held in the fund. A supporting organization is a charity that carries out its exempt purposes by supporting other exempt organizations, usually other public charities. See Publication 526, Charitable Contributions for more information on the types of organizations that qualify.
Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with the individual's volunteer services to a qualifying charitable organization. Cash contributions don't include the value of volunteer services, securities, household items or other property.
100% limit on eligible cash contributions made by itemizers in 2021
Subject to certain limits, individuals who itemize may generally claim a deduction for charitable contributions made to qualifying charitable organizations. These limits typically range from 20% to 60% of adjusted gross income (AGI) and vary by the type of contribution and type of charitable organization. For example, a cash contribution made by an individual to a qualifying public charity is generally limited to 60% of the individual's AGI. Excess contributions may be carried forward for up to five tax years.
The law now permits electing individuals to apply an increased limit ("Increased Individual Limit"), up to 100% of their AGI, for qualified contributions made during calendar-year 2021. Qualified contributions are contributions made in cash to qualifying charitable organizations.
As with the new limited deduction for nonitemizers, cash contributions to most charitable organizations qualify, but, cash contributions made either to supporting organizations or to establish or maintain a donor advised fund, do not. Nor do cash contributions to private foundations and most cash contributions to charitable remainder trusts
Unless an individual makes the election for any given qualified cash contribution, the usual percentage limit applies. Keep in mind that an individual's other allowed charitable contribution deductions reduce the maximum amount allowed under this election. Eligible individuals must make their elections with their 2021 Form 1040 or Form 1040-SR.
Corporate limit increased to 25% of taxable income
The law now permits C corporations to apply an increased limit (Increased Corporate Limit) of 25% of taxable income for charitable contributions of cash they make to eligible charities during calendar-year 2021. Normally, the maximum allowable deduction is limited to 10% of a corporation's taxable income.
Again, the Increased Corporate Limit does not automatically apply. C corporations must elect the Increased Corporate Limit on a contribution-by-contribution basis.
Increased limits on amounts deductible by businesses for certain donated food inventory
Businesses donating food inventory that are eligible for the existing enhanced deduction (for contributions for the care of the ill, needy and infants) may qualify for increased deduction limits. For contributions made in 2021, the limit for these contribution deductions is increased from 15% to 25%. For C corporations, the 25% limit is based on their taxable income. For other businesses, including sole proprietorships, partnerships, and S corporations, the limit is based on their aggregate net income for the year from all trades or businesses from which the contributions are made. A special method for computing the enhanced deduction continues to apply, as do food quality standards and other requirements.
Keep good records
The IRS reminds individuals and businesses that special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining an acknowledgment letter from the charity before filing a return and retaining a cancelled check or credit card receipt for contributions of cash. For donations of property, additional recordkeeping rules apply, and may include filing a Form 8283 and obtaining a qualified appraisal in some instances.
For details on how to apply the percentage limits and a description of the recordkeeping rules for substantiating gifts to charity, see Publication 526, available on IRS.gov.
The IRS also encourages employers to help get the word out about the advance payments of the Child Tax Credit because they have direct access to many employees and individuals who receive this credit.
For more information about other Coronavirus-related tax relief, visit IRS.gov/coronavirus.
As always, please feel free to call us at the office with any questions!
Life is full of milestones – from welcoming a new bundle of joy into your family to embarking on exciting entrepreneurial ventures. While these moments bring joy and excitement, they also bring changes to your financial landscape, including their impact on your taxes. At Acumen MB LLC, we understand that each of these life events carries unique tax implications, and we’re here to guide you through them. 1. The Birth of a Child : Welcoming a new member to your family is a life-changing event, both emotionally and financially. Did you know that having a child can lead to tax benefits such as the Child Tax Credit, Child and Dependent Care Credit, and the Earned Income Tax Credit? Additionally, you may want to explore tax-advantaged savings options like a 529 plan for your child’s education expenses. Our team can help you navigate these opportunities and ensure you’re maximizing your tax savings. 2. Buying or Selling Real Estate : Whether you’re purchasing your dream home or selling an investment property, real estate transactions can have significant tax implications. From capital gains taxes to mortgage interest deductions, it’s essential to understand how these transactions impact your tax liability. Consulting with our experts can help you strategize to minimize taxes and maximize returns in your real estate endeavors. 3. Buying or Selling a Business : Entrepreneurship comes with its own set of tax considerations, especially when buying or selling a business. Structuring the transaction in the most tax-efficient manner can save you substantial amounts of money. Whether you’re evaluating the tax consequences of an acquisition or planning an exit strategy, our team can provide invaluable advice tailored to your unique situation. 4. Investment Income During Volatile Periods : Volatile markets can lead to fluctuations in investment income, which in turn can affect your tax liability. Understanding the tax treatment of various types of investment income, such as capital gains, dividends, and interest, is crucial for optimizing your tax situation. We can help you develop tax-efficient investment strategies that align with your financial goals. 5. Moving : Relocating to a new state or country can have significant tax implications, State and local income tax rates vary widely, and moving across state lines can impact your tax filing requirements and deductions. Additionally, international moves may trigger complex tax issues such as foreign income reporting and tax treaties. Our team can assist you in navigating the tax consequences of your move and ensure compliance with applicable laws. These are just a few examples of life events that can impact your taxes, but there are many others. Whether you’re getting married, divorcing, starting a business, or planning for retirement, consulting with our experienced tax professionals can provide peace of mind and potentially save you money. At Acumen MB LLC, we’re committed to helping you make informed financial decisions at every stage of your life. Contact us today to schedule a consultation and take control of your tax situation. Remember, proactive tax planning is the key to financial success!
Making a Difference: Acumen MB LLC Celebrates National Volunteering Week in Cleveland and Nationwide
As National Volunteering Week approaches, we at Acumen MB LLC are thrilled to celebrate the spirit of giving back and making a positive impact in our community. Volunteering is not just about donating time; it’s about contributing to the greater good, fostering connections, and creating lasting change. This year, we are excited to shine a light on some incredible volunteering opportunities right here in northeast Ohio or in your area. Feeding the Hungry: One of the most pressing issues facing communities across the nation is food insecurity. Numerous organizations are working tirelessly to ensure that no one goes hungry. From food banks to soup kitchens, there are ample opportunities to volunteer your time and support those in need. Consider lending a hand at a food bank or pantry or serving meals at a local shelter. Your efforts can make a significant difference in the lives of individuals and families struggling to put food on the table. Mentoring Youth: Empowering the next generation is essential for building a bright future for our community. Organizations like Big Brothers Big Sisters and Boys & Girls Clubs provide invaluable mentorship programs that help young people reach their full potential. By volunteering as a mentor, you can make a profound impact on a child’s life, offering guidance, support, and encouragement. Environmental Conservation: Protecting our environment is a collective responsibility, and there are plenty of opportunities to get involved in conservation efforts. Whether it’s participating in a local clean-up event, volunteering at a community garden, or joining a conservation organization, you can play a vital role in preserving the beauty of our natural surroundings for future generations to enjoy. Supporting Seniors: Many seniors in our community face challenges such as loneliness, limited mobility, and financial hardship. Volunteering with local organizations or senior centers can provide much-needed companionship and assistance to older adults in need. Whether it’s visiting with seniors, helping with household tasks, or organizing recreational activities, your time and compassion can make a world of difference. Caring for Animals: Let’s not forget about our furry friends who also need our support and care. Cleveland is home to several animal shelters and rescue organizations dedicated to finding loving homes for pets in need (including our very own Head of Security, Eddy!) Volunteering at a shelter can involve everything from walking dogs and socializing with cats to assisting with adoption events and fundraising efforts. By volunteering your time and skills, you can help improve the lives of animals and contribute to their well-being. At Acumen MB LLC, we believe in the power of volunteering to strengthen communities and drive positive change. That’s why we encourage our team members to get involved in causes they are passionate about and support their efforts to make a difference. This National Volunteering Week, we invite you to join us in giving back and making a lasting impact in the lives of others. Together, we can create a brighter, more compassionate future for all.
As we step into Public Service Recognition Week, Acumen MB LLC extends our heartfelt gratitude to all those who dedicate their lives to public service. This week is not just a mere acknowledgment; it’s a celebration of the unwavering commitment and selfless dedication of individuals who work tirelessly to serve our communities, nation, and beyond. At Acumen MB LLC, we understand the invaluable contributions made by public servants. From firefighters who bravely rush into burning buildings to educators shaping the minds of our future leaders, from healthcare workers providing compassionate care to civil servants ensuring the smooth functioning of our government institutions – each role plays an integral part in the fabric of society. Public service is more than just a job; it’s a calling, a commitment to something greater than oneself. It requires sacrifice, resilience, and an unwavering sense of duty. It’s about putting the needs of others before our own and striving to make a positive difference in the lives of those we serve. As an accounting firm, we have had the privilege of working with various public sector organizations and witnessing firsthand the dedication and passion that public servants bring to their roles. Whether it’s managing budgets, ensuring compliance, or providing financial insights, these individuals work tirelessly behind the scenes to ensure that resources are allocated efficiently and effectively to meet the needs of the community. Public Service Recognition Week is not only an opportunity to express our gratitude but also a time to reflect on the importance of supporting and empowering our public servants. It’s about recognizing their contributions, advocating for their well-being, and investing in resources and infrastructure that enable them to thrive in their roles. As we celebrate Public Service Recognition Week, let us take a moment to thank all those who serve our communities with integrity, compassion, and dedication. Your commitment to public service inspires us all, and we are honored to stand alongside you in making a positive impact on the world.
As a leading accounting firm dedicated to ensuring the financial health and security of our clients, we are always vigilant about safeguarding sensitive information. With World Password Day upon us, it’s an opportune moment to reflect on the critical role cybersecurity plays, especially during tax season. In today’s digital age, passwords serve as the frontline defense against unauthorized access to confidential data. Whether it’s personal tax information or sensitive financial records, protecting this data is paramount. At Acumen MB LLC, we understand the significance of robust cybersecurity measures in preserving the integrity of our client’s financial information. Tax season, in particular, underscores the importance of maintaining secure passwords and implementing stringent cybersecurity practices. With cyber threats becoming increasingly sophisticated, individuals and businesses alike are vulnerable to data breaches, identity theft, and financial fraud. As trusted financial advisors, we recognize the immense responsibility entrusted to us by our clients to ensure the confidentiality and security of their financial data. Here are some essential tips to enhance your cybersecurity posture, not only during tax season but throughout the year: 1. Create Strong, Unique Passwords : Avoid using easily guessable passwords such as “123456” or “password.” Instead, opt for complex combinations of letters, numbers, and special characters. Consider using a reputable password manager to generate and store secure passwords for various accounts. 2. Enable Multi-Factor Authentication (MFA) : MFA adds an extra layer of security by requiring additional verification steps beyond a password, such as a unique code sent to your mobile device. By enabling MFA, you significantly reduce the risk of unauthorized access to your accounts. 3. Stay Vigilant Against Phishing Attempts : Be cautious of unsolicited emails, messages, or phone calls requesting sensitive information or prompting you to click on suspicious links. Cybercriminals often use phishing tactics to trick individuals into divulging personal or financial data. Verify the legitimacy of communications before taking any action. 4. Regularly Update Software and Security Patches : Keep your operating system, antivirus software, and other applications up to date with the latest security patches. Vulnerabilities in outdated software can be exploited by cyber attackers to gain unauthorized access to your devices and networks. 5. Educate Yourself and Your Team : Invest in cybersecurity awareness training for yourself and your employees. Educate them about common cyber threats, safe browsing practices, and the importance of maintaining strong passwords. A well-informed team is your first line of defense against cyber attacks. At Acumen MB LLC, we go above and beyond to uphold the highest standards of cybersecurity to protect our clients’ financial interests. From implementing robust encryption protocols to conducting regular security audits, we employ a multi-layered approach to safeguarding sensitive data. As we observe World Password Day, let us reaffirm our commitment to cybersecurity best practices and empower ourselves with the knowledge and tools necessary to defend against evolving cyber threats. Together, we can ensure a secure and prosperous financial future. Remember, your password is the key to your financial fortress. Handle it with care and fortify your defenses against cyber adversaries. Stay secure, stay informed, and let us at Acumen MB be your trusted partner in navigating the complex landscape of taxation and finance. Wishing you a happy World Password Day and a cyber-secure future ahead!
As we celebrate National Small Business Month, it’s a perfect opportunity to reflect on the resilience, creativity, and dedication of small business owners across the nation. At Acumen MB LLC, we understand the pivotal role small businesses play in driving economic growth and fostering innovation. As advocates for small business success, we’re here to provide valuable insights and guidance, particularly in the realm of taxes and accounting. Taxes: The Backbone of Business Operations Taxes are an inevitable aspect of running a business, but they need not be daunting. Here are some key considerations to ensure your tax strategy aligns with your business goals: 1. Stay Organized: Maintaining meticulous records of income, expenses, and receipts throughout the year streamlines the tax preparation process. Utilize accounting software or engage with professional services to keep your financial records in order. 2. Understand Deductions: Familiarize yourself with available deductions and credits that can minimize your tax liability. Deductible expenses may include office supplies, equipment purchases, travel expenses, and even a portion of your home office if applicable. 3. Plan Ahead: Proactive tax planning is essential for optimizing financial outcomes. Assess your tax obligations quarterly to avoid surprises at year-end. Consider scheduling a consultation with our experts at Acumen MB LLC to develop a comprehensive tax strategy tailored to your business needs. Accounting: Building a Strong Financial Foundation Effective accounting practices form the bedrock of a successful small business. Here are some fundamental principles to enhance your financial management: 1. Accurate Bookkeeping: Maintain accurate and up-to-date financial records to gain insights into your business’s financial health. Regularly reconcile bank statements, track expenses, and categorize transactions to monitor cash flow effectively. 2. Budgeting and Forecasting: Develop a realistic budget and financial forecast to guide decision-making and resource allocation. By setting clear financial goals and monitoring performance against benchmarks, you can identify areas for improvement and capitalize on growth opportunities. 3. Strategic Advisory Services: Leverage the expertise of accounting professionals to receive strategic guidance and actionable insights. Whether you’re seeking assistance with financial analysis, business valuation, or strategic planning, our team at Acumen MB LLC is committed to supporting your business objectives. As we honor National Small Business Month, let us recognize the remarkable contributions of entrepreneurs and small business owners nationwide. At Acumen MB LLC, we are dedicated to empowering small businesses with the knowledge, tools, and support they need to thrive. By implementing proactive tax strategies and adopting sound accounting practices, you can position your business for sustained success in an ever-evolving marketplace. Reach out to us today to discover how we can partner with you on your journey towards financial prosperity.
As we celebrate National Mom and Pop Business Owners Day, we at Acumen MB LLC extend our heartfelt gratitude to all the passionate entrepreneurs who drive the spirit of small businesses across the nation. Today, we reflect on the invaluable contributions you make to our communities and economy, and we reaffirm our commitment to supporting your journey toward financial success. At Acumen MB LLC, we understand the dedication, hard work, and sacrifices that go into running a small business. As fellow entrepreneurs ourselves, we empathize with the challenges you face, especially in navigating the complex landscape of accounting and taxes. However, we firmly believe that with the right guidance and expertise, every small business has the potential to thrive. Accounting and tax management are often perceived as daunting tasks, overshadowing the joy and passion that drive you to pursue your dreams. But fret not, for we are here to alleviate your burdens and empower you with the financial acumen necessary to flourish. Our team of seasoned professionals is committed to providing personalized solutions tailored to your unique needs, ensuring compliance, maximizing efficiency, and optimizing profitability. In the spirit of National Mom and Pop Business Owners Day, we invite you to reflect on the journey you’ve embarked upon. Remember the initial spark of inspiration that ignited your entrepreneurial spirit, the countless late nights spent strategizing, and the moments of triumph that reaffirmed your resilience. Today, celebrate your accomplishments and embrace the unwavering determination that sets you apart. As advocates for small businesses, we recognize the pivotal role you play in shaping our communities and driving innovation. Your dedication not only sustains livelihoods but also fosters a sense of belonging and camaraderie that transcends mere transactions. Together, we form the backbone of a vibrant entrepreneurial ecosystem that thrives on collaboration and mutual support. In commemorating National Mom and Pop Business Owners Day, let us reaffirm our commitment to nurturing the entrepreneurial spirit that defines us. As your trusted partners in prosperity, we stand ready to assist you in overcoming obstacles, seizing opportunities, and charting a course toward sustained success. Together, let us embrace the journey ahead with optimism, resilience, and unwavering determination. Happy National Mom and Pop Business Owners Day!
As a team at Acumen MB LLC, we are thrilled to celebrate National Nutrition Month. This month is a time to reflect on the importance of proper nutrition and its impact on our health. At Acumen MB LLC, we strongly believe in the power of food as medicine and its ability to prevent illnesses from occurring in the first place. It’s crucial to recognize that what may be healthy for one person may not be the best solution for another. Each individual has unique nutritional needs based on factors such as age, gender, activity level, and health status. Therefore, personalized nutrition guidance is essential to help individuals make informed choices that support their overall well-being. For instance, our team member Amanda follows a gluten free lifestyle for her health. (If you’re considering a gluten-free lifestyle or have any questions about it, Amanda is a great resource!) We also encourage you to explore the benefits of incorporating functional foods into your diet. Functional foods are those that provide health benefits beyond basic nutrition. Examples include foods rich in antioxidants, probiotics, and omega-3 fatty acids. By incorporating these foods into your diet, you can support your body’s natural defense mechanisms and promote overall health and wellness. As we celebrate National Nutrition Month, we invite you to join us in prioritizing your health and well-being. Whether you are looking to improve your diet, manage a chronic condition, or simply enhance your overall health, we are here to support you. Together, we can harness the power of food as medicine and create a healthier, happier future for ourselves and our loved ones.
As we celebrate International Women’s Week and International (Working) Women’s Day, we at Acumen MB LLC would like to take a moment to reflect on the invaluable contributions of women in the workforce and beyond. As an accounting firm, we are proud to say that our team is comprised of 75% women, and we recognize the immense value they bring to our organization and the broader professional landscape. In recent years, there has been a significant push for gender equality in the workplace, and we are committed to fostering an environment where all individuals, regardless of gender, feel empowered to thrive and succeed. We firmly believe that diversity and inclusion are essential components of a successful business, and we are dedicated to promoting these values within our firm and the wider community. As we continue to work towards gender equality, we must also recognize and address the unique challenges that women face in the workforce, such as the gender pay gap and lack of representation in leadership positions. By fostering a culture of inclusivity and support, we can create a more equitable and prosperous future for all. It’s important to acknowledge that women’s contributions extend far beyond the workplace. Many women (and men) choose to dedicate their time to caring for their families and homes, and their efforts are equally as important and deserving of recognition. The roles of caregiver and homemaker are often undervalued, but we understand the vital role they play in our society and economy. Additionally, we must not forget the invaluable contributions of parents, who often have the toughest job of all. The work of parenting is demanding, relentless, and often goes unnoticed. Yet, it is the foundation of our society and shapes the future generations. Parents, regardless of gender, deserve our utmost respect and appreciation for the work they do. This International Women’s Week, let us celebrate the achievements of women in all aspects of life and work towards a more inclusive and equitable future for all.
In today’s competitive job market, employers are constantly seeking new ways to attract and retain top talent. With voluntary turnover rates reaching record highs, companies are looking for any edge they can get. One increasingly popular benefit that has been gaining traction is student loan repayment programs. These programs offer a win-win solution for both employers and employees, and recent changes in tax laws have made them even more affordable. Thanks to the Consolidated Appropriations Act, signed into law in 2020, employers can now offer up to $5,250 in student loan repayment benefits without paying any tax. This change has made student loan repayment programs more accessible to a wider range of employers, and as a result, more and more companies are offering some form of loan repayment support. In fact, by October 2023, 34% of employers were offering student loan benefits, up from just 17% in 2021. The need for student loan repayment programs is clear when you consider the scale of the student loan epidemic in the United States. Nearly 44 million Americans owe more than $1.6 trillion in student loans, making it the fourth highest U.S. debt category. The average federal student loan debt balance is nearly $38,000, and when you factor in private loan debt, the total average balance may be more than $54,000. Given these staggering numbers, it’s no wonder that student loan repayment benefits could be a major draw for job candidates. For employers, offering student loan debt relief can help attract and retain talent more easily. Studies have shown that 86% of workers would commit to an employer for five years if the employer offered student loan support. This can lead to increased employee loyalty and engagement, as well as improved productivity and job satisfaction. Setting up a student loan repayment program is relatively straightforward, especially with the help of a financial organization that offers program management. However, if you prefer to handle it yourself, here are a few tips to keep in mind: 1. Determine the monthly payments you want to contribute, keeping in mind that even small amounts can save employees thousands of dollars in interest. 2. Set a cap on the maximum amount you’ll contribute. 3. Decide who will be eligible to receive the benefit, keeping in mind that nondiscrimination rules do not apply to student loan repayment programs. 4. Consider requiring a specific work commitment from the employee in exchange for loan repayment assistance. It’s also worth noting that there have been recent updates to 401(k) plans that allow employers to help employees pay off their student loan debt without sacrificing an employer retirement match. This can be a particularly attractive benefit for employees who are struggling to save for retirement while also paying off their student loans. In conclusion, student loan repayment programs can be a valuable tool for employers looking to attract and retain top talent. By offering this benefit, employers can help their employees pay off their student loans faster, improve their financial health, and increase their loyalty and engagement. And with recent changes in tax laws, these programs are more affordable than ever.
Acumen MB LLC is thrilled to announce that our written information security plan (WISP) has successfully passed a rigorous review conducted by a PTIN Security Certified IT Firm, Tech 4 Accountants! Our WISP has met all the stringent data security requirements outlined in IRS Publication 4557, IRS Publication 1075, IRS Publication 5293, IRS Publication 5708, and IRS W-12 Paid Preparer Tax Identification Number (PTIN) Application and Renewal. This means that we are fully equipped to safeguard your sensitive information and maintain the highest standards of confidentiality and integrity. The approved WISP period is valid until 12/20/2024. After this date, we will be required to resubmit a new written information security plan that complies with the latest regulations. Rest assured, we are committed to staying ahead of the curve and ensuring that your data remains protected. Why is WISP important? A WISP is a comprehensive set of policies and procedures designed to protect sensitive information from unauthorized access, use, disclosure, modification, or destruction. It is crucial for any organization that handles sensitive data, as it helps mitigate risks and ensures compliance with legal and regulatory requirements. Thank you for your trust in Acumen MB LLC. We are dedicated to maintaining the highest standards of security and confidentiality, and we look forward to continuing to serve you with excellence.
