Lifetime charitable giving, properly planned, may afford income tax savings. Under current federal income tax law, the income tax charitable deduction is available to taxpayers who itemize deductions rather than take the standard deduction. The standard deduction is $24,400 for a married couple, filing jointly in 2019 and half that amount for a single individual. Given the amount of the standard deduction and the $10,000 cap on the deductibility of state and local income and property taxes, the charitable income tax deduction is useful in years when a taxpayer can afford to be generous. For example, a taxpayer may consider making one or more substantial charitable gifts in a single year when the taxpayer will itemize deductions by establishing a donor advised fund with a financial institution, favorite charity or community foundation. The taxpayer then can itemize and take the charitable deduction in a single year when the gift is made but can recommend grants out of the donor advised fund to favored charities over the course of several years.
To learn other tax efficient ways to give to charity, contact Henry Grix in the Troy, Michigan office at 248-433-7548 or another DW trusts and estates or tax lawyer.