The Tax Cuts & Jobs Act (TCJA) of 2017 has significantly impacted taxpayers' standard deductions. For instance, the standard deduction for married couples filing jointly in 2022 is $25,900, which will increase to $27,700 in 2023. While this increase is beneficial, it's important to note that it may limit the tax benefits of itemizing deductions, including charitable donations.
However, the TCJA has also expanded the limit for charitable deductions. For the 2023 tax year, you can deduct up to 60% of your adjusted gross income (AGI) through charitable deductions. This includes not just cash donations, but also property like clothing or household goods, and appreciated assets such as stocks, ETFs, or mutual funds. The limit for deducting charitable donations of appreciated assets is 30% of your AGI.
This is where Daffy comes in as a great option for a Donor-Advised Fund (DAF). With Daffy, you can start giving and saving more. Daffy allows you to organize all your tax-deductible receipts in one place, making the process of itemizing your deductions easier and more efficient.
Moreover, if your standard deduction is less than the total of your itemized deductions, you should consider itemizing as you’ll save more money. For example, if you have a mortgage or home loan, it’s worth seeing if itemizing would save you money. You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately). If this brings you close to the standard deduction, then consider itemizing as you can also deduct your property taxes, state income taxes, and charitable donations, too.
In conclusion, while the TCJA has increased the standard deduction, it has also expanded the opportunities for charitable giving. With Daffy, you can maximize these opportunities and make the most of your tax deductions.
Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.