Tax Strategy for Charitable Donations Under the New Tax Act



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While we are just beginning to wrap our thoughts around the Tax Cuts and Jobs Act, we are already learning some strategies for taxpayers to consider before the end of 2017.  One of the simplifications of the new act is to create much higher standard deductions for the future.  The new standard deductions are $24,000 for married couples and $12,000 for single filers.  The trade-off to this change is to limit deductibility of state and local taxes, to further limit the interest deduction for homeowners and to do away with miscellaneous itemized deductions entirely. Congress expects this to result in fewer taxpayers being able to itemize their deductions.  If you think you may find yourself in this position next year, some year end planning may make sense.

The first tax strategy is to accelerate your 2018 deductions into 2017 – give more this year and less next year when your deduction may be limited.  Another strategy is to “bunch” your future charitable contributions into years when they will exceed the standard deduction so that you will be able to deduct at least part of the donations.  One more idea that may make sense is to open a “donor advised fund”, or DAF.  These accounts allow donors to effectively bunch their donations into one year and distribute them from the fund in the future.  We’ve written previously about these DAFs and you can read our previous commentary by clicking here.  Finally, if you are over 70 1/2 years old and have an IRA, you can direct up to $100,000 per year to charities in lieu of your annual required minimum distribution. This way, you won’t have to pay tax on your IRA distribution and you can direct the money to your favorite charities.

Laura Saunders of the Wall Street Journal discusses this strategy and several more in her article in the December 19 edition of the paper.  Click here to access the article (if you subscribe to

If you have any questions, feel free to contact us, your personal tax advisor or we can make arrangements for someone at our sister firm Maddox, Thomson & Associates to talk with you.

Horizon Wealth Advisors is a Houston based fee-only wealth management firm. Horizon is a fiduciary advisor. We specialize in helping successful individuals and families understand, organize, and manage their often complex financial situations. Horizon offers integrated financial planning and investment management services.

Horizon Wealth Advisors
Horizon Wealth Advisors is a Houston-based, privately owned, fee-only financial advisor established in 1999. Our mission is to develop long-term relationships with thoughtful, successful individuals, families, and organizations by supporting and assisting them in achieving their financial goals.

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