Experts suggest 4 strategies to optimize your charitable donations tax deductions on Giving Tuesday.

• Claiming a tax deduction for charitable donations made on Giving Tuesday can be challenging.
• Since 2018, claiming a tax break for charitable donations has become more difficult due to the higher standard deduction.
• Experts suggest there are strategies to maximize your tax break.

Experts advise that claiming a tax deduction for charitable donations made on Giving Tuesday can be challenging.

In 2022, Americans donated an estimated $3.1 billion to their preferred organizations, which is a 15% increase from the previous year, as reported by GivingTuesday.

Although tax breaks are not the primary motivation for giving, a higher standard deduction has made it more difficult to claim charitable tax breaks. Nonetheless, some giving strategies provide greater savings than others, according to experts.

When filing taxes, you can choose between the standard deduction or the sum of your itemized deductions, which may include charitable and medical deductions, state and local taxes, and more.

The Tax Cuts and Jobs Act in 2018 nearly doubled the standard deduction, resulting in a decrease in the number of filers who itemized. For the tax year 2023, the standard deduction for single filers is $13,850, while married couples filing jointly can claim a standard deduction of $27,700.

Financial experts suggest the most tax-efficient charitable giving strategies to consider.

1. Qualified charitable distributions

Before anything else, Juan Ros, a certified financial planner at Forum Financial Management in Thousand Oaks, California, advised those aged 70½ or older with savings in pre-tax individual retirement accounts to consider qualified charitable distributions (QCDs).

In 2023, individuals can transfer up to $100,000 from their IRA to an eligible nonprofit organization through QCDs. Starting in 2024, the limit will be adjusted for inflation.

Although charitable deductions are not available, IRA distributions do not increase your adjusted gross income, and Qualified Charitable Distributions (QCDs) can decrease your IRA balance over time. Additionally, QCDs can fulfill required minimum distributions if you are 73 or older.

CFP Michael Maye, owner of MJM Financial Advisors in Gillette, New Jersey, and a certified public accountant, stated that QCDs are an excellent way to contribute to charity, particularly for individuals with substantial IRAs and higher marginal tax rates.

2. Donor-advised funds

Maye suggests that donor-advised funds are a "great option" for gifts when paired with profitable assets.

Donor-advised funds provide an immediate tax deduction but function as a charitable checking account, allowing for future gifts to be made at any time.

Experts suggest that some investors prefer the ease of making a single donation to a donor-advised fund, rather than keeping track of gifts to various charities throughout the year.

3. Give profitable assets

Experts suggest sending profitable assets to a donor-advised fund or directly to a charity instead of cash when making charitable donations.

You can avoid capital gains taxes by transferring profitable investments from your brokerage account to other assets.

If you donated assets that you owned for more than a year, you can deduct their full market value, up to 30% of your adjusted gross income. Any excess donation can be carried over to the next five tax years, Maye explained.

4. Bunching donations

Donor-advised funds are a popular strategy for exceeding the higher standard deduction, as they allow donors to bunch their donations into a single year, rather than making a gift every year.

Donors can save money by lumping multiple years of gifts into a donor-advised fund, according to CFP Mitchell Kraus, owner of Capital Intelligence Associates in Santa Monica, California.