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Potential Tax Benefits of Charitable Giving

While deductions probably aren’t the primary reason you give, your generosity could have benefits come tax time.

Itemized Deductions in a Post-Tax Cuts & Jobs Act World

By nearly doubling the standard deduction to $12,000 for individuals and $24,000 for married couples filing jointly, the 2017 Tax Cuts & Jobs Act (TCJA) moved the threshold for itemizing deductions much higher than it used to be. But that doesn’t necessarily mean those whose income falls below that threshold can no longer claim charitable deductions. It just means a little more planning is involved.

Here are two strategies that may help you keep your deductions under updated tax laws:

Strategies to Consider: Bunching and Donor-Advised Funds

Bunching is the grouping of multiple years’ worth of charitable gifts into a single year. By consolidating charitable gifts, you can accumulate enough deductible expenses to qualify for itemized deductions. You can take the standard deduction in the following year. Meanwhile, a donor-advised fund is a type of investment account that allows you to make gifts to a charity.

Watch this short video to see how these strategies could help you retain your deductions:

By bunching these deductions on their taxes, the couple cleared the threshold, was able to itemize deductions and retained the tax benefits of their charitable gifts.

How Could This Impact Your Financial Plans?

It’s our job to review and clarify tax legislation so our clients understand how recent changes could impact their broader financial picture. Contact a Baird Financial Advisor to learn more about how changes to the tax code could impact your charitable giving or overall financial plans. Not a Baird client? Find a Baird Financial Advisor.


Baird does not provide tax or legal advice. Please consult your legal or tax professional for specific information.