Normally, charities are very active with their solicitations during the holiday season, giving you the opportunity to decide whether to make contributions at the end of the current year or simply wait a short time and make them after the end of the year. Because charitable contributions are entirely payable at your discretion, they fit right into the bunching strategy.įor example, if you normally tithe at your church, you could make your normal contributions throughout the current year and then prepay the entire subsequent year’s tithing in a lump sum in December of the current year, thereby doubling up on the church contribution in one year and having no charitable deduction for the church in the next year. When employing the bunching strategy, a taxpayer essentially doubles up on as many deductions as possible in one year, with the goal of itemizing deductions in one year and then taking the standard deduction in the following year. Congress did revise the law to allow limited amounts of cash contributions made in 20 to be deducted without itemizing, but this was only a temporary provision and doesn’t apply in other years.īunching – If your charitable deductions are not enough to bring your itemized deductions greater than your standard deduction, the bunching strategy may work for you. If the total of all your itemized deductions does not exceed the standard deduction amount for the year, then you are better off taking the standard deduction, but in doing so, you will get no tax benefit from your charitable contributions. The standard deduction is adjusted annually for inflation. This means that to achieve any tax benefit from your charitable donations, you cannot use the standard deduction, which for example is $12,950 for those filing single, $19,400 filing head of household, and $25,900 for married individuals filing jointly for 2022. This online tool will enable you to search for qualified organizations.Īlso, to be able to deduct charitable contributions, one must itemize their deductions. You can also check by going to IRS.gov/TEOS. You can ask any organization whether it is a qualified organization, and most will be able to tell you. nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose or that work to prevent cruelty to children or animals. To be deductible the contributions must be made to qualified charitable organizations, which generally only include U.S. Being knowledgeable of what is and is not a qualified charity, a qualified charitable contribution, and charitable giving strategies can go a long way toward maximizing your charitable tax deduction. And there are some contributions that you may believe are deductible that really are not. Your charitable contributions include a wide variety of tax-saving opportunities, some you may not be aware of, and some that are frequently overlooked.
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