Will My Contributions Still Count?
Tax Change Delights Part II

This issue of Dispatches discusses the impact the new tax law has on charitable contributions. I hope it is useful to you.

What’s Changed

The tax law that took effect this year nearly doubled the standard deduction, making it likely that only about 10% of taxpayers will now be itemizing deductions. Therefore, unless your state and local taxes (capped at $10,000), mortgage interest, contributions and other deductions exceed $24,000 (married filing joint), $18,000 (head of household) or $12,000 (single) you will be among the estimated 90% of taxpayers who now claim the standard deduction.

Will My Contribution Still Be Deductible?

Your donation of cash, stock or other property is still eligible for deduction if made to a qualified charitable organization (501-c-3). However, if your standard deduction exceeds all of your itemized deductions (including contributions) then you are not realizing a tax deduction from your charitable contributions. Many tax exempt organizations are concerned that fewer people will donate because they will not be reaping a direct tax benefit.Some advisors have recommended combining a couple of years’ donations into one, in an effort to exceed the standard deduction for that particular year, and still help the charity.

Using Donated Stock As A Strategy

If you have “losers” in your investment portfolio, you can sell them, take a capital loss (capped at $3,000 per year) and donate the proceeds to charity and use the contribution to increase your deduction (if you itemize). Conversely, you can donate “winners” to charity, avoid capital gains taxes and again increase your deduction (if you itemize.)