An established Flowood, Mississippi tax planning firm, Capital Preservation Services focuses on strategies for achieving the maximum legal tax savings possible. The Capital Preservation Services team works closely with individual and small business clients in navigating an evolving federal tax landscape.
One strategy for increasing tax deductions centers on optimizing charitable giving to reflect new tax itemization thresholds. With charitable donations only deductible when they are itemized, the standard individual deduction of $12,000 ($24,000 for joint filers) has created a situation where many taxpayers fall well short of this amount on a yearly basis. For example, a single $9,000 charitable gift does not create a tax benefit, as donations are still $3,000 shy of exceeding the required amount for deduction.
A strategy to deal with this involves bundling donations, through giving a larger contribution every second or third year, rather than smaller amounts spread across several years. This has an added benefit of enabling the individual to make use of the “free” $12,000 standard deduction amount in the years in which contributions are not made.
One restriction taxpayers should be aware of is that deductions can only be made up to 30 percent of the adjusted gross income when donating securities, and 60 percent when donating cash.