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  • Neil Mahoney

Charitable Giving Considerations For Families With Special Needs Children

Updated: Feb 1

If you are a parent or caregiver of a special needs child, you are well aware that it truly takes a village to support individuals with disabilities and special needs.


All of the organizations out there that focus on helping those with disabilities and special needs deserve to be celebrated and appreciated.


One way to show our gratitude towards these organizations is through charitable giving. In this article, we focus on explaining the following:


  • 2021 expanded tax benefits for charitable giving;

  • Donor Advised Funds; and Organizations to consider for your giving, that focus on those with disabilities and special needs

Expanded Tax Benefits For Charitable Giving During 2021

With the current tax law, it is harder to receive the full tax benefit of giving to charity. The main reason for this has to do with the fact that, in order to receive the tax benefit of charitable giving, you must itemize your deductions.


However, the reality is that most taxpayers and households will end up taking the standard deduction. In fact, it is expected that more than 90% of taxpayers will take the standard deduction due to the changes from the Tax Cuts and Jobs Act (TCJA) of 2017.


While it is getting very close to the end of the year (2021) and these changes may rear their heads in future years, it is important to be aware of a recent tax provision. Specifically, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 aims to help those that are charitably-inclined, but aren’t able to itemize their tax deductions.


In short, a married filing jointly household is able to deduct up to $600 ($300 if single) in cash donations to charitable organizations, even if you do not itemize your tax deductions. More details are outlined here, but we strongly advise you to take advantage of this if possible.

Smart Ways To Give - Donor Advised Funds

Given our note above about itemized deductions vs. taking the standard deduction, there is a smart way to give that allows you to “bunch” charitable contributions in staggering years, with the goal being to optimize your long-run tax benefit of giving.


This can be done by utilizing what is called a Donor Advised Fund (DAF). Simply put, this type of account can act as the vessel from which you “grant” funds to the different organizations that you would normally give to.


However, instead of sending a check directly to the organization of choice, you would pre-fund (or contribute) to your DAF. The contribution into the DAF would be an irrevocable gift and provide you a tax deduction for the contribution (if you itemize that year).


The “bunching” strategy comes into play when you think about your annual charitable giving that you would like to do. For example, let’s say you give $5,000 every year to “Parents Helping Parents”. Therefore, in a 5-year window of time, you would have given $25,000 to “Parents Helping Parents”. However, you may not be able to itemize your deductions in this case.


With a DAF, you would seed fund for $25,000 in one year and this would likely help make sure that you itemize your tax deductions. With the money in the DAF, you can invest it, let it grow, and “grant” it to “Parents Helping Parents” each year over the 5-year window. This is just an example to show the benefit of “bunching” and using a Donor Advised Fund.


It is important to note that you would likely plan for utilizing this depending on how your income is trending. If you have a higher income year, contributing a large lump-sum into the DAF could make sense.


Finally, the goal of giving is to truly have a desire to give without expectations. The tax benefits are a nice perk, but it should not dictate your desire to give and most importantly, you should not consider utilizing a DAF unless you are already charitably-inclined.

Special Needs Organizations To Consider For Your Charitable Giving

There are so many amazing organizations that offer programs, services, and support to the families within the special needs community.


If you are looking for organizations that really help the special needs community and are thinking about giving, below are several worth exploring:


We’re Here to Help

At ABW Wealth Advisors, we believe that wise stewardship of money leads to a better quality of life for your family. We want to improve your life by managing your finances related to your families’ goals and needs. We help special needs families and the wider disability community prosper.


If you’d like to know more about our services and how we can help you and your family deal with the challenges of having a disability, schedule a “Break the Ice Introductory Call”.

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