Navigating Tax Season: Insights for Your Charitable Giving
As tax season approaches, it’s the perfect time to revisit the fundamentals of charitable giving and how it aligns with your philanthropic goals. At Greater Houston Community Foundation (Foundation), our goal is to facilitate your charitable contributions while ensuring the tax implications are straightforward and advantageous. Whether you’ve already established a donor advised fund (DAF) or are contemplating starting one in 2025, here are key insights into tax rules that govern charitable giving.
Why Itemizing Deductions Matters in Charitable Giving
Understanding whether to itemize your deductions is crucial for your charitable contributions. When preparing your taxes, itemized deductions are reported on Schedule A of IRS Form 1040. The adjustments for the 2025 tax year outlined below typically pertain to income tax returns that will be submitted during the 2026 tax season. Notably, the following dollar figures related to the 2025 tax year are of particular interest to many taxpayers:
Standard deductions for the tax year 2025 will see the following increases:
- Single taxpayers and married individuals filing separately will benefit from a standard deduction of $15,000, which is a $400 increase compared to 2024.
- Married couples filing jointly will have a standard deduction of $30,000, reflecting an $800 rise from the previous year.
- Additionally, for heads of households, the standard deduction will be set at $22,500 for 2025, marking a $600 increase over the amount for 2024.
Contact us today to speak with one of our experienced philanthropic advisors about how strategic, effective giving can enhance your impact and optimize your tax deductions. Our team is ready to work alongside your CPAs, financial advisors, and tax attorneys to ensure a seamless collaboration.
DAF Perks: Do You Need Receipts?
One of the many advantages of utilizing a DAF with the Foundation is simplifying your charitable giving. Instead of collecting numerous receipts for each contribution, you only need to retain the tax receipt from your initial donation to the Foundation. This means a single gift—whether cash or appreciated stock—empowers you to support countless charities without the hassle of tracking and documenting every individual contribution.
To claim a deduction, consider these necessary documentation requirements:
Gifts over $250: Requires written acknowledgment from the charity. The Foundation handles this for you for contributions to your DAF or any other fund type.
Non-Cash Contributions: For gifts valued above $500, use IRS Form 8283. You’ll need an appraisal for proper documentation if your contributions exceed $5,000—like private stock or real estate.
Continue reading: What is a Donor Advised Fund? The Complete Guide
Deduction Limits for Charitable Donations
When contributing to public charities, including your fund at the Foundation, there are specific limits:
Cash Donations: Deductible up to 60% of your Adjusted Gross Income (AGI).
Non-Cash Assets: Donations such as appreciated stock or real estate can be deducted up to 30% of AGI. Plus, by donating these appreciated assets you can potentially avoid capital gains tax, ultimately allowing more funds to support the causes you care about.
IRA Charitable Distributions: If you’re aged 70½ or older, you can make Qualified Charitable Distributions (QCDs) from your IRA, up to $108,000 in 2025. These distributions can be directed to specific funds at the Foundation (including designated or unrestricted funds, but not donor advised funds) and may also count toward your required minimum distributions.
Bunching: DAFs are one of the most popular tax strategies for charitable giving. Bunching charitable donations allows donors to “bunch” multiple years of charitable contributions into one tax year, allowing them to surpass the standard deduction threshold.
Greater Houston Community Foundation does not provide tax advice or services. We encourage you to consult your tax professional for the tax consequences of your particular situation.
Let Us Support Your Charitable Goals
At Greater Houston Community Foundation, our commitment is to seamlessly guide you in achieving your charitable goals this tax season and throughout the year. We understand that your philanthropic journey is unique, and our experienced team is ready to work with you to develop a tailored giving strategy that aligns with your financial objectives and passion for making a significant impact in the community.
We encourage you to reach out for personalized support and insights to enhance your charitable giving experience. By partnering with us, you can maximize the benefits of your generosity while ensuring that your contributions truly uplift and transform lives across the greater Houston area. Contact Kevin Pickett or Andrea Mayes to learn how we can help make your charitable vision a reality.
More Helpful Articles by Greater Houston Community Foundation:
- Bob Harvey’s Amplified Giving: Evolving Philanthropy to Shape Houston’s Future
- What is a Donor Advised Fund? The Complete Guide
- What’s the Difference Between a Designated Fund vs. a Field-of-Interest Fund?
- Supporting Education: A Guide to Scholarships for Donors
- Philanthropy at Home: Nurturing Values Across Generations
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