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I usually donate about $20k to charities every year, and I don't have many other deductions to claim. Given that the new tax law doubles the standard deduction to $24k, I effectively don't get tax benefits from my charitable donations anymore because I don't have enough deductions to itemize.

Are there any creative loopholes to get around this so that when I donate to charity I reduce my taxable income? I know that one quasi-solution is to save up my charitable donations for several years and then give away a bunch of money within the same tax year so that I surpass the standard deduction in that year. But that's not good for the charities.

Are there any other ways to get a tax benefit from charitable donations under the new law? I own a small business, in case that provides any opportunities (though I gather that I can't write off cash donations made in the name of the business).

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    You may not get the deduction per se, but the standard deduction is much larger, so you are getting the tax advantage, plus some $4K more.
    – Norm
    Commented May 7, 2018 at 17:11
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    @Norm: No, it means that people with significant deductions lose out on what used to be the individual exemption (Adding it into the standard deduction made it unavailable to those who itemize), causing AGI to be higher than it used to be. It pretty much cancels out the savings from the percentage rate reductions.
    – Ben Voigt
    Commented May 7, 2018 at 22:51
  • @taxypayer22847 Having your business do the charitable contribution seems to be the way to go. At least in the case of a C-corp, the company would make the $20 donation, and reduce your W-2 by that amount. But maybe this isn't possible if your business is considered a pass-through? Is this what you're alluding to in your question?
    – avernet
    Commented May 8, 2018 at 18:40
  • @taxypayer22847: Even before the new tax law, the mortgage deduction didn't get you anywhere near the standard deduction unless you've got either a really expensive home or a really bad loan.
    – R.. GitHub STOP HELPING ICE
    Commented May 9, 2018 at 4:02
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    @R.. that's the average interest, but as I'm sure you know the interest is higher in the earlier years and lower in the later years.
    – stannius
    Commented May 9, 2018 at 18:25

4 Answers 4

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I’m in the same boat as you. Charitable contributions make up the majority of my itemized deductions, and I probably won’t be itemizing next year. Here is how I look at it:

If I end up taking the standard deduction, instead of deducting my charitable contributions, I get to deduct more than my charitable contributions. That’s a better deal for me than if the standard deduction had stayed below my level of giving.

Even before the new tax reform laws, I don’t give to charity solely for the purpose of getting a tax deduction. (Giving $1 only so that I can get $0.25 back is not rational.) I give for other reasons, and those reasons haven’t changed with the new laws.

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  • @BenMiller Sure, but that doesn't change the way for those who donate <24K (I guess 14K for those with 10K SALT deduction), giving is more expensive than it used to be.
    – Andrew Lazarus
    Commented May 7, 2018 at 22:40
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    The new standard deduction is not a better deal than the old combination of standard deduction and personal exemption.
    – Ben Voigt
    Commented May 7, 2018 at 22:55
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    @BenVoigt For some, that might be true, but don’t forget that the tax rates dropped in each bracket as well.
    – Ben Miller
    Commented May 7, 2018 at 23:27
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    Yes, overall it isn't any worse (and for people who were already using the standard deduction, it's obviously quite a bit better)
    – Ben Voigt
    Commented May 8, 2018 at 0:09
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    @BenMiller the only thing I would add to your excellent answer is that you are now free to give to anyone and record keeping is simplified. For example, that mom of young children who has breast cancer. You can give directly to her with impunity as the tax deductions are off the table anyway.
    – Pete B.
    Commented May 8, 2018 at 14:30
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Probably the best approach which can work very well depending on your cashflow and the giving in question (whether it's time sensitive or not):

  • 2018: save all $20k in the bank
  • January 1, 2019: give all $20k to charity (from 2018)
  • 2019: give another $20k
  • Dec31, 2019: (optional) give another 20k
  • 2020: give none

This means you will take the standard deduction in 2018/2020 and itemize $60k in 2019.

You can sometimes put property taxes into this too.

I've saved a ton on taxes using this even before the new tax code with this approach and will likely prioritize it even moreso now that the standard deduction increased so much.

You briefly mentioned this as "save a few years" but there's no reason to save a few years. While you "late load" charitable giving in 2018, you preload all your 2020 so depending on the recipient in question it may be a neutral cash flow option.

If you are particularly worried about cashflow implications for the charity and can afford it you could move the entire thing up a year and just give $40k this year (the 2019 giving at end of year 2018) which will mean the charities see the money at the same pace. Depending on scale of the recipient you may want to give them a heads up (ie if you donate 20k to a charity with a 100k budget) that your end of year 2018/2019 donation is intended to be your 2019/2020 donation.

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  • The question already covered this; the saving in earlier years is what makes the lump sum giving possible.
    – Ben Voigt
    Commented May 7, 2018 at 22:54
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    @BenVoigt OP rejected it with a false premise though.
    – enderland
    Commented May 8, 2018 at 2:01
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    @BenMiller I specifically mention ways to mitigate that problem.
    – enderland
    Commented May 8, 2018 at 12:33
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    @BenMiller and realistically if a charity has a budget of $10M/year whether you give 20k in two years or 40k/0k really won't matter much at all (assuming the entirety of 20k went to one year).
    – enderland
    Commented May 8, 2018 at 13:49
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    @ElysianFields Indeed, but some of us give to smaller charities with smaller budgets for which our gifts are a significant part of their continued existence.
    – Ben Miller
    Commented May 8, 2018 at 13:52
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A donor advised charity fund can allow you to set aside several years worth of charity and then give donations whenever you wish.

For example you can put 40-60k in the fund during a single tax year and write it off then. As the next few years progress, you can donate the money whenever you wish.

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    One year, I owned stock that had a large long term cap gain. I used this strategy to avoid the 15% tax as well as group my donations in a high tax year, effectively giving me a 50% tax refund on the donation that year. And I distributed to charities over the following years.
    – JTP - Apologise to Monica ♦
    Commented May 8, 2018 at 0:38
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    When you put money in a donor advised fund, you deduct your contributions in the year that you put the money in the fund. This isn’t really any different than if you give the money directly to the charity. The fund is only useful if you don’t yet know who you want to give the money to.
    – Ben Miller
    Commented May 8, 2018 at 10:15
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    The benefit is that the charity never sees a change in the giving pattern, yet you can make a deduction of 5 years worth of contributions every 5 years.
    – mhoran_psprep
    Commented May 8, 2018 at 10:45
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    @mhoran_psprep Not really. They only see no change if you’ve already got 5 years worth of giving saved up in advance. And if you do, the charity would rather get that money up front than have to wait for it to be doled out over the next 5 years. And you get no tax benefit to putting the lump sum in the fund vs. just giving the sum to the charity directly.
    – Ben Miller
    Commented May 8, 2018 at 11:32
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    @BenMiller Presumably, you can buy stocks with the money in the fund, so the charity isn't losing out from a time-discount point of view.
    – Acccumulation
    Commented May 8, 2018 at 21:30
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Giving varying amounts to the charity probably isn't a problem for them, unless they're small. But if you want to avoid that, there are various loopholes with loans. If the charity is willing to play along, you can "loan" them money each year, then forgive several years of loans at once. You can then claim the amount of the loan as a charitable donation for that year. You might be able to set up a foundation, "loan" money to the foundation, have the foundation then give the money to charity, and then forgive the loans. But you should probably check with a tax expert to see if the IRS would call shenanigans on that.

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