NAVIGATING CHARITABLE GIVING AND THE NEW TAX LAW
For many people in Texas, it is important to support certain causes or charitable organizations. This support may come in the form of volunteering time and expertise or it may come in the form of making financial contributions to an organization. Charitable giving can make people feel good about their ability to help further a cause that means a lot to them and it can also provide them with a well-deserved and appreciated tax benefit. However, since the new tax law went into effect, the road to taking advantage of this benefit has changed.
As explained by Bloomberg, the increased standard deduction rolled out by the Tax Cuts and Jobs Act did reduce the number of itemized tax returns that were filed. Some people may have felt that since they were not able to gain an additional tax deduction for a charitable donation that it was not worth it to them to make that donation. Charitable donations in 2018 dropped by 1.7% in total, encompassing foundations, corporations and individuals. Donations by individual taxpayers dropped by 3.4%.
Forbes indicates that philanthropic efforts need not be stopped just because the tax laws have changed. Instead, taxpayers are encouraged to understand the new tax laws and find creative ways to continue to provide the support needed and desired by charities while still receiving some advantageous tax benefits.
Because 100% of the value of a donation may be credited in a deduction on an itemized tax return, individuals could consider donating larger sums every other year instead of smaller sums annually. This pushes the value of their deductions over the standard deduction level in the years they donate, justifying the itemization and charitable giving deduction.