Changes in tax deductions for charitable donations

December 6, 2017 9:59 AM

I am confused about what is going on with charitable donations in the new tax bill. If my donations will be deductible for 2017 but not 2018, I will make a bunch of extra donations in advance. If it won't make a difference, I will continue with my usual steady donating, which is probably better for charities' budgets than lumpy donating.

I am confused about whether charitable donations will not be deductible next year, or if they will just be deductible for fewer people because there will be fewer people itemizing.

We currently itemize our deductions, and we might also itemize for 2018, but I am not 100% sure about that if the SALT deduction is gone. I think most of our itemizing is state taxes.

The only way we would not itemize for 2017 is if the SALT change were retroactive for this year.

posted by insoluble uncertainty to Law & Government (2 answers total)

Best answer: The changes would be effective beginning for 2018. The proposals would not directly change the deductibility of charitable contributions, but the other changes might make the standard deduction larger than the remaining itemized deductions, which would mean that fewer people see a tax benefit from deducting.

So it may make sense for you to accelerate your donations. The plan would also reduce marginal tax rates, which is the benefit you get from deducting an additional dollar, so that's a second reason to accelerate donations.

And I wouldn't worry about how it would affect charities' budgets unless your donation is a significant portion of their budget; for example, if you are giving a $10,000 donation to a charity with a $200,000 budget. (And in that case, you're probably well-known to the staff and you can just tell them that you are accelerating your donation.) I've seen charities claim that recurring donations help them plan, but my assumption is that they say that to get you to sign up for an automatically recurring donation, which reduces the risk that you won't give again next year.
posted by Mr.Know-it-some at 10:33 AM on December 6, 2017 [4 favorites]

Best answer: Another vote here for accelerating your donations, if you can. In their later years, my parents made their regular donations in January and December of the same year and itemized their deductions for that year. Then they would skip the donations the next year and take the standard deduction. It's a good strategy to follow if you have barely enough deductions to justify itemizing and, depending on what emerges as the final tax bill (if the House and Senate are able to come to agreement on something that can pass both houses), may be relevant for even more people in the future.
posted by DrGail at 10:51 AM on December 6, 2017 [3 favorites]