Advice | Tax Cuts and Jobs Act (TCJA)
As year-end planning quickly approaches, clients may be asking how to reduce their income tax bills. One of the few itemized deductions that clients can control, and increase, is the charitable deduction. The Lehigh Valley Community Foundation helps philanthropically minded people and their professional advisors with tax planning strategies for charitable giving.
Donation bunching, lumping, or stacking can be a smart strategy in this tax environment. The donor-advised fund is a powerful charitable giving tool that can help. For example, your client makes a tax-deductible donation to a donor-advised fund now to exceed the newly increased standard deduction. In subsequent years, the client takes the standard deduction while recommending grants from the donor-advised fund to nonprofits of her choice over a period of time. Therefore, the client is “bunching” the tax deduction of the donations into a single tax year (the year in which the fund was established). An added benefit of a donor-advised fund is the ability to accept gifts of appreciated securities, which are particularly popular in this market environment.
The donor-advised fund platform at the Lehigh Valley Community Foundation provides donors with community knowledge, community leadership, and expert grantmaking advice. Our mission is to truly connect donors to the causes that matter to them—we are more than just a charitable checking account. Donors and their professional advisors value our simple, powerful, and highly personalized approach to giving, with a direct connection to the local community.
We believe that many donors will continue to support their favorite charities because their hearts are prompting them to give, but we also know that many donors want to find ways to continue to lower their income tax bill through charitable giving. Contact us at 610-351-5353 to learn more about our donor-advised fund platform and other services, so you can help your clients make the most impact with their charitable investments.
Charitable Donation Deduction
For taxable years beginning in 2021, taxpayers who do not itemize deductions may take a deduction for cash donations of up to $300 made to qualifying organizations. The CARES Act revised the charitable donation deduction rules to encourage donations following a decline after the enactment of the Tax Cuts and Jobs Act in 2017.
Trisha R. Higgins, CPA
Vice President & Chief Financial Officer
840 W. Hamilton Street, Suite 310, Allentown, PA 18101
Voice 610 351-5353 ext. 15 | firstname.lastname@example.org