Money Matters: Strategies for Charitable Donations
COLUMBIA, S.C. (WIS) - Current changes in tax law have made it more difficult for people who donate to churches and charities to get a tax benefit for those contributions.
However, as Todd Bartman, a CPA with Capital City Financial Partners explains, “There’s a little known fund called a donor-advised fund and what this fund allows you to do is you can put multiple years of your charitable contributions that you make to your churches and charities into this account and you can take the itemized deductions. So, you group years of contributions together, you can itemize this year, and then you would take the standard deduction for the following year.”
Bartman says the fund allows you to maintain control and distribute funds to the churches and charities of your choice, at the time you would like to. He explains that funds can be distributed in one year, over several years, or even over your entire lifetime. Bartman says the whole process is relatively easy and it allows someone to group all of their charitable contributions together.
Additionally, he says there’s a benefit to setting up a donor-advised fund. Because the standard deduction doubled in 2018, several people are not able to itemize anymore and have to take the standard deduction, resulting in no tax benefit for charitable contributions. However, by grouping contributions together, it allows people to take 4 or 5 years of contributions that they’re normally making and put it all into one year thus allowing them to itemize. Bartman says the process can benefit anyone and potentially add up to hundreds or thousands of dollars in tax savings.
For more on donor-advised funds, please see Capital City Financial Partners.
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