Year-end giving can be a popular way for Americans to obtain a tax write-off on their tax return before hitting the end-of-year deadline. But, with President Donald Trump’s tax reform, this technique could make it difficult for people donating to benefit from those write-offs in 2018.
In 2017, the standard deductible for a married couple with a joint account is $12,700. That number will jump significantly in 2018 — upward of $24,000.
The standard deductible for singles is $6,350 in 2017 but will rise to $12,000 in 2018. It isn’t until a person hits the standard deductible until those tax write-offs start going into effect.
General manager for Liberty Tax in Midlothian, Patrick Perez, said a survey concluded that 78 percent of the participants were concerned that the tax law would affect their 2017 taxes. He made it clear that the changes won’t take effect until 2018. But, after Dec. 31, 2025, the tax code could revert back.
In order for donations to be written-off a person’s taxes, that individual has to meet their standard deduction first. Perez noted that, currently, individuals or households that have additional expenses like high medical bills, mortgage interest, real estate taxes, charitable giving and unreimbursed employee expenses use those to meet the standard.
For a donation to be recognized, the person filing his or her taxes has to include the charitable items or monetary contributions in an itemized list. If donations are not itemized, the donor will not benefit from it on their taxes. If a single monetary donation totals at or exceeds $250, then a receipt for the donation has to be presented.
But, only items and money donations towards 503C organizations, non-profits, will benefit the donor.
After Hurricane Katrina hit in 2005, some people were asked to prove their donation by providing a photo with their taxes. Perez agrees that Texans should do the same with the items they’ve donated especially towards Hurricane Harvey relief.
With the standard deductible nearly doubling in 2018, it could make it difficult for people to benefit from giving if they pay low property taxes or house payment. But what isn’t clear is how much the personal deduction will rise, if any at all.
Perez said he agrees that high earners will indeed be impacted.
“Individuals or households with high property taxes will be affected. However, it should force state and local authorities to reevaluate how they tax their constituents in the future,” he explained.
The executive board secretary for Waxahachie’s SPCA, Chris Bennett, said during Christmas time and nearing the end of the year, “there is a slight uptick in regards to giving.” But, Bennett doesn’t think raising the standard deductible will keep people from donating.
“To a small extent, I don’t think it’s going to move the needle that much because if people are going to give, then they are going to give,” Bennett said. “I feel that people are creatures of habit. If it does dip, then I think it will be very light. But then, all in all, for people that do routinely give are still going to give.”
Being a non-profit, Bennett mentioned how the staff does have the absolute best interests for the animals they are caring for, “but the bottom line is essentially the bottom dollar.”
He said this year SPCA of Ellis County had received more donations than demanded services. But with being a non-profit, it’s hard to maintain volunteers, so even if the contributions are there, volunteers are needed.
Christine Hockin-Boyd, executive director of Meals-on-Wheels of Johnson and Ellis Counties, another local non-profit, said they couldn’t comment on whether this deduction increase will affect Americans' giving, but she did emphasize on the meeting the year-end tax deadline.
“December 31 is a powerful motivator for charitable giving, creating an opportunity for nonprofits as donors try to meet the year-end tax deadline and take advantage of deductions. For Meals-on-Wheels of Johnson and Ellis Counties end-of-year giving has become a wonderful tradition for both individuals and businesses alike. Consider helping your favorite nonprofit to end the year strong.”
“I do agree with the charities, most people are going to giving anyway,” Perez said. “Due to the rise in the standard deduction, most individuals won't be able to deduct their Charitable gift giving. However, most individuals we see currently don't exceed their standard deduction based on the [current limits].”