Wednesday, December 05, 2018

Group Contributions to Reduce Taxes

With the increase in the standard deduction to $12,000 single, and $24,000 married filing joint, many taxpayers will no longer need to itemize and, therefore, not be able to deduct charitable contributions.

If one makes significant, but not large enough to be deductible, contributions, a way to achieve deductibility is to group multiple years together and cover it with a contribution in one year.   Another way is to make a single large contribution to a charitable fund and then distribute it over the next few years.

For example, one could group 3-4 years for church contributions and make the contribution in a single year.  Or one could make a single large contribution to a charitable fund and distribute the annual amounts over several years.   In either case, the deduction would the full amount contributed in one year, to the fund or to the organization.

So in one year, the taxpayer would take a large charitable contribution deduction that puts them over the standard deduction threshold.  In the non contribution years, the taxpayer would take the standard deduction.

For more on The Practice of Personal Finance, check back Wednesdays  for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

No comments: