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.
Lorri Griffin, a tax-filing specialist at Taxes By Lori, in Waxahachie, said, “You will have to be over those numbers [standard deductible] to benefit from donating, and I don’t personally see enough people wanting to donate up to that amount… I think a lot of people when this comes into play next year, a lot of people will quit itemizing and that is what the government is looking for them to do.”
In other words, “I do believe they [tax reform] are going to hurt the donation aspect of this because some people donate strictly to be able to write it off their tax return and now they won’t be able to,” Griffin explained.
Griffin said one way to reach that deductible is by donating, using a credit card, even if it isn’t paid off. She mentioned how churches like Waxahachie Bible Church, have set-up online portals for credit card donations. Even though the card isn’t paid off, the amount will count for the 2017 year.
“You can go online and pay your contribution to a non-profit like that,” Griffin said. “If you put that on a credit card and you’re not even paying off the credit card yet, it’s considered paid. So if you wanted to donate to something, go online to a church, pay with your credit card, and you can deduct that also.”
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 they donated items by providing a photo of the goods with their taxes. Griffin suggests Texans do the same with the items they’ve donated, especially after Hurricane Harvey hit.
With the standard deductible nearly doubling next year, this could make it difficult for people to benefit from giving if they pay low property taxes or house payments.
“Now I have some clients that live in Dallas, and they pay almost over $12,000 in property taxes alone,” Griffin said. “So, between that and their interest and their giving, they will probably beat that $24,000. But there’s going to be a bunch of us that will get nowhere near it.”
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 that 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, the people that do routinely give are still going to give.”
Being a non-profit, Bennett mentioned how the staff has 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 this year. 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 for Meals on Wheels for Johnson and Ellis Counties, another non-profit, said they couldn’t comment on whether the increased standard deduction will affect Americans giving, but she did emphasize on the meeting the year-end tax deadline.
“Dec. 31 is a powerful motivator for charitable giving, creating the opportunity for nonprofits as donors try to meet the year-end tax deadline and take advantage of deductions," Hockin-Boyd said. "For Meals on Wheels of Johnson & 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.”