Every week, Allworth Financial’s Steve Hruby, CFP, and Bob Sponseller, ChFC, answer your questions. If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to yourmoney@enquirer.com.
Randy in Anderson Township: I’ve heard about ‘bunching’ charitable donations for tax purposes. But what is it, and should I be doing it?
Answer: ‘Bunching’ might sound like something you do to curtains, but in the tax planning world, it’s actually a savvy strategy—especially in the post-tax-reform era, where fewer people itemize.
Here’s how it works: Instead of spreading out your charitable donations evenly each year, you ‘bunch’ two or three years’ worth of giving into a single tax year. This can push you over the standard deduction threshold, making it worthwhile to itemize and actually deduct those donations. Then the following year, you might take the standard deduction again.
Bunching can be especially powerful if you pair it with a donor-advised fund (DAF), which lets you claim the full deduction now while spreading the giving over time.
Here’s the Allworth Advice: If you give to charity regularly and your total deductions fall just short of the standard deduction, bunching can help you get credit for generosity you’re already showing. So, try running a quick tally of your itemized deductions over the past couple years. If you’re close to that threshold, timing your giving differently could save you hundreds (or more) at tax time without spending an extra dime. A trusted tax professional or fiduciary advisor can help walk you through the finer points of this strategy.
T.E. and S.E. in Newport: We just got married last year. Are there any advantages to filing our taxes separately?
Answer: Congratulations! Generally speaking, it typically makes more sense for a married couple to file their taxes jointly. This simply comes down to dollars and cents: filing jointly affords you more tax breaks, such as a much larger standard deduction (for Tax Year 2025, the standard deduction is $31,500 when filing jointly; it’s $15,750 when filing separately).
That said, there are a few scenarios where ‘married filing separately’ might make sense.
For example, if one of you had significant unreimbursed medical expenses last year, filing separately may allow you to deduct more of those costs, since the IRS threshold is based on a percentage of each filer’s income. Filing separately could also make sense if either of you is on an income-driven repayment plan for federal student loans, as the payment calculation would be based on just your individual income rather than your combined household income. And if there’s a situation where one of you has concerns about the other’s tax situation (like back taxes), filing separately can help protect the other spouse from being liable for those tax issues.
However, there are drawbacks to this approach. You both must itemize or both must take the standard deduction (no mixing and matching). Plus, as we alluded to earlier, many deductions and credits vanish altogether when filing separately.
The Allworth Advice is that you could always try running the numbers both ways—filling jointly and filing separately—and compare the refunds or balances owed. The better option in the vast majority of cases is filing jointly, but it never hurts to give it a look if you’re curious. Just be sure to speak with a trusted tax professional if you have any questions.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered throughAllworth Financial a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call (513) 469-7500.
This article originally appeared on Cincinnati Enquirer: Allworth Advice | Tax benefits of donation ‘bunching’
Reporting by Steve Hruby, Bob Sponseller, Special to the Enquirer / Cincinnati Enquirer
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