With the increase in standard deduction in 2018 for
individuals, it is estimated by the Tax Policy Center that of the 46 million
people who itemize, only 19 million will continue to itemize deductions on
their tax return in 2018. Taxpayers are seeing less benefit by itemizing due to
the increased standard deduction, but they may be able to bunch their
deductions to still receive some benefits from itemizing their deductions.
Bunching charitable expenses is spending and deducting expenses
from two years (or more) into one year. How this is accomplished is by picking
a year to start and paying double (or more) the charitable amounts that one
would normally pay in any given year. It may sound difficult to accomplish, but
it could be done with only one month difference in paying time. A person could
pay all their regular charitable deductions in January of 2018 and then pay the
charitable deductions that they would normally pay in 2019 in December of 2018
instead.
See the following illustration for a married-filing joint
couple who regularly pays $15,000 in charitable deductions to see the benefit
of bunching charitable expenses:
With bunching the taxpayers can take advantage of $11,000
more in deductions over the two year period. At the 12% tax bracket, that is
the potential of $1,320 in tax savings, plus any additional that could arise
from other potential tax credits or lower state income tax. $1,320 or more in
tax savings every two years could be worth the additional planning and
preparation it may take to begin bunching charitable deductions.