A new tax law enacted in 2017 doubled the standard deduction to $12,000 for individuals and $24,000 for couples. For many this means that the standard deduction will lower your tax bill more than itemizing your deductions. For most people, the standard deduction will be the better option and they will not get a deduction for their charitable contributions. In order to get credit for your charitable deductions the amount donated must be higher than this standard deduction.
If you have a long-term plan of contributing to your alma mater, a favorite charity or a religious institution, you may want to consider a lump sum contribution exceeding the amount of the standard deduction so that you can apply the tax deduction rather than spreading it out and losing the deduction opportunity.
A donor-advised fund allows you to contribute several years' worth of charitable donations to the fund at once and receive the tax benefit immediately. A donor-advised fund allows you to donate money, receive a charitable tax deduction, and continue to grow the money until you are ready to distribute it the charity you select.
Each university will have its own rules on the donor-advised fund and how the money is distributed. There may be minimum or maximum limits on the amount you can donate each year or a requirement that you donate a specific amount.
Consult with an experienced advisor before making any large donations. To learn more about charitable giving and tax implications, please contact Stouffer Legal in the Greater Baltimore area at 443-470-3599.