Utilizing the standard deduction makes it easier to fill out a tax return, but it can also eliminate the tax advantage of charitable contributions. Fortunately, there is a way to take the standard deduction and still use your charitable contributions to cut taxes: make your charitable contributions in unsold commodities rather than cash.
To see whether this method will save you money, simply add up the eligible itemized deductions from last year's Schedule A. If the sum is less than the standard deduction and you expect it to be the same this year, making a contribution in unsold commodities could cut your income tax by reducing your gross income.
A contribution in commodities may cut your social security tax if it reduces your income level below the maximum income level to which the tax is applied. Reducing your income with a commodities gift will also reduce the Medicare tax you pay. Please check with your professional advisors to determine if this is a good gift option for you. If you have questions about this or any other planned giving ideas, please contact The Office of Gift Planning.
- You must grow the crop you contribute in a previous year
- You must be an active farm producer
- You have to be a cash-basis taxpayer
- The charity you contribute to must sell the crop