A study of the new tax law conducted by the Lilly Family School of Philanthropy at Indiana University posed that the increase in the standardized deduction would dissuade donors who normally write-off those contributions. By now you have probably already done your 2018 taxes – the first year the new law goes into effect. The good news, the standardized deduction just about doubled (to $12,000 for single, and $24,000 for married). The bad news, if you had regularly written of deductions just over and above the old standard deduction then you will have kept all those receipts and records for nothing, right?
In the study, the Lilly Family School of Philanthropy supposes that because a charitable contribution deduction is now not available to most tax payers, donations to charity will be down. And according to Giving USA, charitable contributions were down slightly over 2017 as adjusted for inflation. Of course, if the tax deduction were the only reason to give we might just chuck the receipts, take the standard deduction, and call filing taxes that much easier.
But maybe with a little planning and forethought we might be able to do both? If you regularly give to charity you might bundle a few years worth of donations into one calendar year and then take advantage of itemizing one year, taking a standard deduction the next, and still have that warm and fuzzy feeling of contributing to your community.
Or consider those regular charitable donations you give to be simplified for you (no need to keep track unless you are nearing your standard deduction) and already “written off” and keep getting that warm and fuzzy feeling when you donate. Planning for tax time – even in mid-year – is never too early!