Charitable Giving After The Tax Reform – Part 3
Here’s what the Tax Cuts and Jobs Act — which will apply to taxpayers starting in 2018 — means for charities and the people who give to them:
- Try ‘bundling’ donations from several years into one year
- Charities, including parishes, are bracing for a big drop in donations
- Open or add to a donor-advised fund to get a deduction — even if you don’t itemize
- If you’re 70½ or older, consider a qualified charitable distribution from an IRA
- People can now give more of their cash to charity
In this email we will focus on the second bullet, charities, including parishes, are bracing for a big drop in donations. What does this mean?
The new law almost doubles the standard deduction. This is the amount everyone is allowed to subtract from their taxable income: $12,000 for singles (up from $6,350 for 2017) and $24,000 for married couples who file jointly (up from $12,700). That can be bad news for parishes and charities because taxpayers will have less of an incentive to itemize their deductions to reduce their taxable income. That also means that people who have donated to charity in the past, whether in part or entirely, as a way to get a tax deduction may be less likely to do so.
The Catholic Foundation, along with many other peers in the non-profit arena, believe that people give because they are passionate about the cause, not because of a charitable deduction. Will the change to the charitable deduction reduce giving to charities? It may, but we don’t think it will- the only way to know for sure will be to see what reports show a year from now.
If you have any questions or want more information, call Scott Hartman at 614-443-8893 or email him at email@example.com.
*In need of a Tax Professional, Financial Planner, or Estate Planning Attorney to help you navigate the new tax laws? Contact us for a referral of one of the members of our Professional Advisors Group.