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How Your Donor Advised Fund Can Provide Annual Support While Still Getting You a Current Year Deduction

by  T. Christian Rollins, MBA, CFRE
Samaritan’s Chief Development Officer 

 

The Tax Cuts and Jobs Act (TCJA) of 2017 essentially doubled the Standard Deduction, resulting in as many as 90% of households no longer being able to itemize their charitable contributions and resulting deductions.  Many households learned of this change only after filing their 2018 tax returns.

Taxpayers eager to minimize their taxable income, were likely disappointed by the loss of previously popular deductions for state and local income and property taxes, home equity loan interest, and for some, charitable contributions.

Those approaching the new, higher standard deduction threshold, may find it appealing and advantageous to “time” or “bundle” eligible contributions, or to employ their donor advised fund (DAF).  For example:  Donors may elect to make a single contribution – directly to Samaritan or to your DAF – every other or every few years, which exceeds the standard deduction.  DAF-holders can then make an annual gift or distribution from their fund, allowing them to sustain their vital and appreciated annual support. Using a DAF to “front-load” charitable contributions can earn back the charitable income-tax deduction, producing current tax savings!  In the years that they do occur, these “intermittent” itemized deductions will make every other potential itemized deduction even more valuable, since 100% of those additional deductions will exceed the standard deduction, and earn additional tax relief.

To learn more about giving through your Donor Advised Fund, and the many other potential advantages of charitable estate planning, please contact Chris Rollins, CFRE at (856) 552-3287 or CRollins@SamaritanNJ.org.