We are in the last quarter of the year now and the holiday season is right around the corner. People are preparing by doing their holiday shopping (which I heard my mother-in-law is already done with –IMPRESSIVE) and it is also a time when charitable giving increases. I have not started or even thought about holiday shopping, as it is a Prentice male tradition to wait until Christmas Eve, but I have planned out my charitable giving in order to gain the most tax benefit possible.
This year I am using the double up strategy in order to maximize my itemized deductions, and save on federal income tax. With the new standard deduction for married filing jointly set at $24,000, most people will now do a standard deduction instead of itemizing. However, by using the double up strategy you may be able to itemize in some years and maximize the tax benefits of your charitable giving.
Here is an approximate example of what I am doing to maximize the tax advantage of my charitable giving.
In addition to my 2018 pledge of $5,000 to the Thurston County Food Bank, I am also going to do my 2019 pledge of $5000 (double up) in 2018. With our other itemized deductions of $4,000 other charity, $3000 property tax, $2000 sales tax and $10,000 mortgage interest, this will give us itemized deductions of $29,000 for 2018. Then, in 2019 I will take a standard deduction of $24,000. Over those 2 years this allowed me to deduct an additional $5,000. If we are in the 24% tax bracket this strategy could net me an additional $1,200. An additional $1,200 that could be donated to the Thurston County Food Bank, hint, hint. (Full disclosure: I serve on the board of directors, so the TCFB is very close to my heart!)