This year, if you want to boost your tax savings beyond the new standard deduction, consider giving away some of your wealth.
The Tax Cuts and Jobs Act went into effect on Monday, bringing with it a slate of changes to the code. Those include an increase to the standard deduction (which nearly doubles to $12,000 for singles and $24,000 for married couples who file jointly), as well as the elimination of personal exemptions.
About 49 million taxpayers, or 28 percent, currently itemize, according to the Urban-Brookings Tax Policy Center. Due to the higher standard deduction, fewer filers are expected to do so in the future.
More than 36 million filers claimed the charitable-giving deduction on their 2015 taxes, according to the IRS.
However, filers who plan their charitable gifts may be able to get themselves over the new standard deduction and itemize — if they use a strategy called “bunching.”
“You would give the same amount of dollars that you would over a two-year period, but you bunch them into one year,” said Charlie Douglas, partner and director of wealth planning at Cedar Rowe Partners in Atlanta.
“Bunching in one year will help you itemize deductions where you couldn’t,” he said.
Here’s what you should know about bunching your charitable gifts.