Here are tax-savvy ways to donate money, according to a charitable giving expert

LAS VEGAS — Tax savings aren't typically the main reason for philanthropy. But if you're readying to donate money, definite charitable giving strategies supply a bigger taxation benefit.

Since the Tax Cuts and Jobs Act of 2017, there's been a higher modular deduction, which makes it harder to assertion charitable taxation breaks, explained Christopher Hoyt, a instrumentality prof astatine the University of Missouri successful Kansas City.

Roughly 33% of taxpayers itemized deductions successful 2017, compared to less than 10% successful 2021, said Hoyt, speaking astatine the American Institute of Certified Public Accountants' yearly conference successful Las Vegas connected Tuesday.  

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For 2023, the modular deduction is $13,850 for azygous filers and $27,700 for joined couples filing together, and there's nary payment to itemized deductions — including charitable gifts, aesculapian expenses and much — until the combined magnitude exceeds the modular deduction.

Given these constraints, investors tin maximize taxation breaks by "bunching gifts," Hoyt said. "Concentrate your gifts successful 1 year, arsenic opposed to spreading them implicit several."

One fashionable enactment for bunching gifts is the alleged donor-advised fund, which provides an upfront taxation interruption portion acting similar a charitable checking relationship for aboriginal gifts.

Donor-advised funds person exploded since the 2017 taxation instrumentality change, and much than 75% are little than 5 years old, according to Hoyt. However, it's unclear whether they volition stay arsenic fashionable erstwhile the accrued modular deduction sunsets successful 2026.

Typically, the champion assets to donate to charity, including donor-advised funds, are profitable investments from a brokerage relationship due to the fact that you tin bypass superior gains taxes, which results successful a bigger acquisition to charity. 

Nearly 60% of 2022 contributions to Fidelity's donor-advised money were non-cash assets, specified arsenic stocks, and galore chose to donate assets with built-in gains, the enactment reported.

Once you're property 70½ oregon older, it's typically amended to donate funds from pre-tax idiosyncratic status accounts, known arsenic qualified charitable distributions or QCDs, Hoyt said.

You tin donate up to $100,000 per twelvemonth from your pre-tax IRA, helium said, and the "secret sauce" is that QCDs tin fulfill your required minimum distributions.

"The large winners are donors who instrumentality the modular deduction," Hoyt said, due to the fact that QCDs don't number arsenic income, which tin penalize seniors done higher Medicare Part B and Part D premiums.

To qualify, you indispensable transportation the wealth straight from an IRA to an eligible foundation and get a confirmation from the enactment that you received nary payment successful exchange, helium said.