Some donors may benefit from concentrating, or “bunching” their charitable contributions for potential income tax savings. So what is bunching and how can it provide tax savings? It is concentrating, for example, doubling your charitable giving in tax year one and then not making charitable donations in tax year two. In this way, a donor may be able to itemize deductions in tax year one with the additional charitable contributions, while then using the standard deduction in year two. The strategy maximizes the impact of your itemized deductions combined with the standard deduction over a two-year tax horizon
By combining the bunching strategy with a donor-advised fund in the Catholic Community Foundation for Eastern South Dakota, you can still smooth the amount received from you by your Parish, Cemetery, Catholic school, or other charitable organizations on an annual basis, and keep their funding from you consistent with your previous year’s giving. Even though you double up your charitable contribution to a donor-advised fund in tax year one, you can recommend distributions from your donor-advised fund over the two year period.
Please contact us to see how concentrating your charitable contributions through “bunching” and a donor-advised fund might be a beneficial option for you.