The 2017 Reduced Employment Tax Act changed the landscape of charitable giving. Although charitable giving has never been motivated solely through tax cuts, these deductions are an important part of the planning process and often pay a significant portion of the donation costs. It changed everything. However, some creative tax systems can still save tax benefits on gifts. However, the key is to be very specific to taxpayers.
What is useful to a group of donors does not work for other donors. This makes the plan more complicated because you need to focus on your situation in order to determine the best technology for you. This article explores some of the new tax bill planning programs for charities and provides specific tips from which you can choose to record most, if not all, deductions. Future articles will continue to discuss planning techniques under the new law. This is a video about this and other planning ideas.
Changes in income taxes eliminate tax incentives for most donors
To understand the new face of a philanthropy plan, you must first understand the new rules. The 2017 tax law doubled the standard deduction, eliminating most of the tax benefits associated with charitable giving. Standard deductions for taxpayers can increase their claim for non-individual income tax returns from approximately $12,000 to $24,000 (for married couples submitting joint tax returns). But other changes will exacerbate this situation. The $10,000 limit on local and local tax credits will limit these deductions to many taxpayers.
Therefore, local and local taxes will not exceed the standard deduction. Finally, many deductions are simply eliminated. The result is that most taxpayers use standard deductions, which they won’t elaborate. This means that charitable donations will not be deducted unless the taxpayer’s plan is not detailed. We will tell you how.
What is the impact of these changes? According to one estimate, 30 million taxpayers specified the deductions, which is only 5 million. Consider the impact of this on donation deductions. The estimated standard deduction of $24,000 is twice the annual reduction in charitable donations of $13 billion. Research by national non-profit organization councils supporting these statistics is available here.
Creative tax planning and attention to non-tax incentives can help offset some of the losses. Charitable donations can be modified to provide tax benefits in the new environment. Here are some techniques that may become more important.
Donations appreciated stocks: this is not the same benefit for many taxpayers
Collecting your most valuable stocks or other assets and transferring them to charities has always been a useful planning tool. Many financial advisors have refined this process and, at the end of each year, appeal to clients to identify positions to be transferred to charities (qualifying charitable donations) by the end of the year. So, for most donors, this technology will still bring advantages, but it is not the advantage I have. Such traditional gifts include, for example, the transfer of gifts. Stocks, charities. Donors never have to include an increase in income. In addition, in most cases, the fair market value of the asset is allowed to be deducted from the donation. This is a double advantage.