The Blitz Newsletter - March 2021

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March 2021

Information on Tax and Estate Planning from the Masonic Charities of the Grand Lodge of Pennsylvania Due to the COVID-19 crisis, all travel and events are suspended until further notice.

2021 Tax Update Two things we can never avoid are death and taxes. Our last issue dealt with preparation for the “death” scenario, reminding you of the importance of completing or updating your will. With a new administration now in Washington, D.C., we will address taxes for 2021. Here are the highlights: 1. Non-itemizer charitable deduction for cash gifts - The nonitemizer charitable deduction has been extended for 2021. In addition, the deduction has been enhanced to allow $300 for single filers and $600 for married couples filing jointly. This is available to taxpayers who take the standard deduction, which are most of us in the country. This tax deduction is limited to cash gifts to qualified charities like the Masonic Charities (supporting organizations and donor- advised funds do not qualify). So, everyone should give at least $300 to their favorite charity each year. 2. Dollar-for-dollar deductions for cash contributions, if you itemize - Contributions to public charities have historically been limited to a percentage of a taxpayer’s adjusted gross income (AGI). The CARES Act lifted the cap on annual contributions for those who itemize, increasing it from 60% to 100% of AGI for 2020 (and now, for 2021). Any excess contributions available can be carried over to the next five years. 3. Federal Estate Taxes - For 2021, the exemption for estate and gift taxes increases slightly to $11.7 million from $11.58 million per individual, or to

$23.4 million for a couple. Right now, there is a lot of chatter about a drastic decrease in the exemption under the Biden administration (rumor has it that it could be anywhere between $3.5 million and $5 million per individual). For those who may be affected by this change, this might be the time to talk to your tax advisor about doing some larger lifetime gifts to heirs and/or charity before the exemption decreases. 4. Federal Gift Taxes - For 2021, the annual gift tax exclusion remains at $15,000. You can give gifts of $15,000 to as many individuals as you would like. Any amount in excess of $15,000 to any individual (or $30,000 for a married couple) will require filing a federal gift tax return, applying such excess against your lifetime exemption. 5. Standard Deduction Limits - The standard deduction for 2021 increases to $25,100 from $24,800 in 2020 for individuals who are married and file jointly. The rates for single filers increase to $12,550 in 2021 from $12,400 in 2020. For those filing as the head of the household, the deduction increases to $18,800 in 2021 from $18,650 in 2020. For individuals over age 65, there is also the additional $1,300 deduction.


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