The Tax Cuts and Jobs Act (TCJA) has made the standard deduction more attractive for many taxpayers, reducing the number of people itemizing deductions. As year-end approaches, evaluating whether to itemize or take the standard deduction on your 2024 federal tax return is essential to maximizing your tax benefits for charitable contributions.
If you expect to claim the standard deduction for 2024, you won’t receive a tax benefit for donations made this year. Instead, consider delaying contributions to 2025, when you may be more likely to itemize. Conversely, if you plan to itemize in 2024 but anticipate taking the standard deduction in 2025, accelerating your contributions into this year might be wise.
Here are the key rules and strategies for maximizing your tax benefits
Charitable Contribution BasicsContributions must be made to IRS-approved charitable organizations. Cash donations are deductible up to 60% of your adjusted gross income (AGI). Non-cash donations and long-term appreciated property have different AGI limits.
Bunching StrategyConsolidate donations in alternating years to maximize itemized deductions in certain years and take the standard deduction in others.
Donor-Advised Funds (DAFs)Set up a DAF to take an immediate deduction for contributions while allowing flexibility to distribute funds to charities over time.
Careful planning ensures your charitable gifts align with your financial and tax objectives. Don’t wait until the last minute. Contact Verity CPAs at info@verity.cpa or 808.546.5026 for guidance on crafting a tax-smart charitable giving plan.
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