The Tax Cuts and Jobs Act of 2017 has proven to be tough on both donors and charitable organizations. While donating to a nonprofit is a great reward, having a tax benefit is a nice perk. While the process of itemizing your donations to claim them in your tax return hasn’t changed, the standard deduction has nearly doubled.
Before the Tax Cuts and Jobs Act, the standard deduction was $6,350 for an individual and $12,700 for a married couple. Those numbers have been raised to $12,200 and $24,400 respectively in 2019, meaning fewer people will receive a tax benefit when donating to charities. If you’re not quite ready to let go of your tax break, there are a few ways to donate and still see a tax benefit.
- Consider making a larger donation every other year, instead of donating the same amount each year. This allows you to get your itemized deductions over the limit one year, while taking the standard deduction the other year.
- A donor-advised fund lets you make a charitable contribution, receive a one-time tax deduction and then you can spread out your donations to the nonprofits you wish to support over several years.
- Before you decide which charities to support, make sure they’re eligible to receive a QCD. The list of entities eligible for a QCD is not the same as the entities eligible for a typical charitable deductible donation. The organization must be a 501(c)(3) charity, but you cannot make a QCD to a donor-advised fund.
Nonprofits did fear that they would see a decline in donations due to the Tax Cuts and Jobs Act. Giving to religious institutions, mostly done by individuals, also fell last year.
At BerganKDV we understand that your charitable donations are often tied to your passions. We’re here to make sure you understand how to plan for giving, understand the new tax laws and can make a difference in the causes you choose to donate to. Start here.
The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.
The views expressed are those of BerganKDV Wealth Management. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investment advisory services and fee-based planning offered through BerganKDV Wealth Management, an SEC Registered Investment Advisor.
1 “How the tax overhaul contributed to a drop in charitable giving.” PBS.org. June 18, 2019.
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