The Tax Cuts and Jobs Act of 2017 raised the standard deduction for 2018 and limited the deduction for state and local taxes to $10,000. As a result, you may no longer be able to itemize your income tax deductions. Consider using your Donor Advised Fund (DAF) to help you plan your charitable giving with maximum tax advantage.
By “bunching” several years of charitable donations into a single tax year gift to a Donor Advised Fund, you may realize the tax benefits of itemizing deductions while also maintaining the freedom to make charitable donations over multiple tax years. For example – let’s assume you normally give roughly $5,000 per year to various charities. Instead, you might contribute $25,000 to your Donor Advised Fund once every five years. Because a contribution to a DAF is tax deductible in the year of the gift, you would contribute enough to enjoy the tax benefit of a gift in year one and request distributions of $5,000 to the charities of your choice in subsequent years.
Donors who have variable income or the flexibility to defer or accelerate income can take advantage of this strategy for potentially even greater tax savings.
This article is not to be considered tax advice.
Please contact your accountant or investment advisor before you take any action.
Susan Jacobs CPA is a Tax Manager at LB Goodman & Co located in Fair Lawn, NJ. She can be reached at or 201-791-8300.