Under the Tax Cuts and Jobs Act of 2017 (TCJA), the standard deduction has increased to $12,000 for individuals and $24,000 for married couples. This means that unless you have itemized deductions beyond these thresholds, you will not realize a tax benefit from your charitable gifts. To avoid this scenario, one strategy for the charitably inclined is to "bunch" charitable contributions into certain tax years to maximize tax savings using itemization. Through the use of a donor-advised fund, you can bunch several years of charitable gifts into one tax-deductible contribution and then recommend grants annually to the charities of your choosing. Funds in a donor-advised fund grow tax free and can be managed by the donor's preferred financial advisor.
The deduction limit for cash contributions was previously set at 50 percent of the donor's AGI. But the TCJA increased this limit to 60 percent. The deduction limit for securities, mutual funds, real estate, and other assets remains unchanged at 30 percent of AGI if given to a public charity or 20 percent if given to a private foundation. Donations beyond these limits may be carried forward for up to five years.
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