Tax Cuts and Jobs Act: Strategic Charitable Giving in 2018
In January 2018, the Tax Cuts and Job Act went into effect, increasing the standard deduction ($12,000 for single-filers, $18,000 for Head of Household-filers, and $24,000 for married couples filing jointly), and eliminating personal exemptions and establishing a $10,000 maximum deduction for state income and local property taxes.
Previous to this change, approximately 30% of filers itemized and took advantage of the charitable gift deduction. It is estimated that less than 5% of filers will be able to itemize and include taxes, mortgage interest, charitable giving and health-related expenses in excess of 7.5% of adjusted gross income. In addition to the effect on individual taxpayers and families, recent estimates as to the effect on the nonprofit sector predict a reduction in charitable giving ranging from $13 - $22B annually.
Charitably committed taxpayers may wish to consider adjusting the timing of their charitable giving to allow them to take advantage of the charitable giving deduction, perhaps in alternate years. Professional advisors are suggesting that taxpayers consider frontloading their charitable giving in a single year which would allow for itemizing charitable deductions, and then taking the standard deduction in subsequent year(s).
At The Community Foundation, we're here to help donors and their advisors maximize charitable giving. Our staff can assist you with thoughtful and strategic tools that support charitable giving and tax-wise planning.
Email me at scappetta at cfgnh.org or call me at 203-777-7071 to review options for your specific circumstances.