While the Build Back Better Act in remains unsettled in the Senate, RMDs, NOLs and Charitable Contributions are determinative for the 2021 tax year.
A taxpayer who is at least 72 years old by the end of the tax year is required to take a Required Minimum Distributions (RMD) for 2021. RMDs were suspended for 2020 without a penalty for 2020 only. A penalty of 50% is imposed on the amount not distributed.
Taxpayers are allowed a deduction for cash contributions to public charities up to 100% of Adjusted Gross Income. The 60% AGI limitation does not apply to cash contributions for 2021. Individual taxpayers who do not itemize are allowed an above-the-line deduction of $300 for certain cash contributions. Married Filing Jointly taxpayers can deduct up to $600 above the line. Donations to donor-advised funds and private foundations are not eligible for the increased limit.
The TCJA rule that limits the use of net operating loss carryovers to 80% of current year taxable income (before considering these losses) was suspended for 2018, 2019, and 2020. However, the 80% limit is scheduled to apply again in 2021 for losses carried over from post-2017 tax years. This includes losses generated in 2018-2020.
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