Tax Planning: Charitable Giving

Tax Planning: Charitable Giving

View Charitable Giving Tax Planning Guide

How to do well by doing good

Giving to charity can provide not only large income tax deductions to help you do well financially but also the satisfaction of doing good. Well-planned gifts also can save estate tax while allowing you to take care of your heirs in the manner you choose. But you must keep in mind various limits that could reduce the tax benefits of your donations.

One important limit to consider is that, traditionally, you can deduct charitable contributions only if you itemize deductions. Fortunately, the CARES Act allowed taxpayers who claim the standard deduction to deduct up to $300 of cash donations to qualified charities in 2020, and the CAA extended this break to 2021 — and increased the maximum deduction to $600 for married couples filing jointly.

Also, remember that the Tax Cuts and Jobs Act (TCJA) has essentially doubled the standard deduction and limited or eliminated many itemized deductions (other than the charitable deduction) through 2025. As a result, some taxpayers who typically used to itemize are now better off taking the standard deduction — in which case they won’t get a federal income tax benefit from charitable gifts beyond what may be available under the temporary break mentioned above. If you’re such a taxpayer, you might benefit from “bunching” donations into alternating years. (See the Case Study: Bunching’ charitable donations can provide tax savings.)

To ensure you understand the tax consequences of your donations and can maximize any benefits, discuss with your tax advisor which assets to give and the best ways to give them.

View our Charitable Giving Tax Planning Guide for more information about:

Cash donations

Stock donations

IRA donations

Other types of donations

Making gifts over time

Charitable remainder trusts

Charitable lead trusts

Qualified charities

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