Changes to the tax law have left many taxpayers wondering why their charitable donations no longer seem to reduce their tax bill. Understanding how the standard deduction affects charitable giving can help you make the most of both your generosity and your tax savings.
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Austin, I am seeing a fair number of clients that are frustrated that their charitable giving isn’t recognized by the IRS anymore. Why is that, and what can they do?
It’s a great question.
So, one thing that’s changed over the past decade under the tax law has been the standard deduction amounts have increased substantially. And so many people are no longer itemizing on their tax return. They’re just simply taking the standard deduction. And we find that to be increasingly true in retirement for clients because they’re done working, kids are out of the house, and mortgage paid off.
And so, what we try and do is help our clients structure their charitable giving in order to make sure that they can not only accomplish those goals that they have for their legacy and charitable purposes, but also in how they can maximize their tax savings.
So, in summary, by adjusting the timing and using some creative planning, we can help our clients capture the tax benefits that they deserve.
We think so.