Bunching Your Charitable Gifts Could Save You on Taxes - Decoding the Tax Law
By: Chris Hostetler Under the new tax code, fewer people will likely claim charitable gifts as itemized deductions.  This is because the standard deduction has been raised and will automatically cover more taxpayers.  It remains to be seen whether this will have a noticeable impact on the total amount that Americans give to charity – I hope that Americans will continue to be as generous as they have been historically, regardless of the tax code. But at the very least, the new tax code may mean you need a new strategy for giving. Depending on your personal tax situation, you might want to consider “bunching”: making two years’ worth of gifts in one year. This strategy could work if you make substantial gifts but still land just below your standard deduction threshold. To understand why this could make sense now, it’s important to first understand one of the basic principles of tax planning in the US.  You can reduce your taxable income using the higher of: ...