LOCAL NEWS

Charities Concerned Tax Law Could Lead To Drop In Donations

Dec 18, 2018, 4:54 PM | Updated: Dec 19, 2018, 1:16 am

It’s estimated that nearly a third of charitable giving in the United States happens in December. But, charities across the country are concerned last year’s overhaul of federal tax law could lead to a drop in donations. 

One of the biggest changes resulting from the 2017 tax law is the standard deduction for most filers has doubled. For singles, it has been bumped up from $6,000 to $12,000 and from $12,000 to $24,000 for couples. 

“So, if you normally itemize deductions and let’s say your itemized deductions total $20,000 and now the standard deduction is $24,000. You are going to go with the higher standard deduction, and it may make it so that your charity donations do not really have an impact on your taxes,” explained CPA Paul Butler, of Butler Tax and Accounting.  

As a result of the doubled standard deduction, the Congressional Budget Office estimates 31 million fewer households will itemize taxes in April. But, to get deductions for charitable giving tax payers need to itemize. Charitable organizations worry less itemization will lead to fewer donations. 

“We have estimates of anywhere from $13 to $21 billion dollars in a loss for charitable donations across the country,” said Kate Rubalcava, CEO of the Utah Nonprofits Association. “In Utah, specifically, we’re not seeing that type of projected loss.” 

Rubalcava said it will be very difficult to predict exactly how the tax law changes will impact charitable giving until taxpayers start gathering all their documents needed to file for their 2019 taxes. 

“It won’t be until we have to do our taxes, and then we’ll see what those changes really do to impact our own tax situations,” she explained. 

Rubalcava believes most Utahns will keep giving, whether or not they reap a tax benefit.  

“Statistics and data within Utah suggest that is the central part of our core. Ninety-two percent of Utahns give to give back and 87 percent give to make a difference in their communities,” she said.   

“I tell my clients there’s the tax benefit and then there is a lot of other things to think about when it comes to charitable giving,” said Butler. “So, look at tax benefits as kind of like the icing on the cake.” 

One option for tax savings, says Butler, is to contribute every other year so in those alternate years, your contribution is twice the normal amount.  

“That way you get the higher itemized deduction one year and the lower standard deduction the other,” Butler elaborated. “This year, we were meeting with clients and kind of running the calculations. Some people were saving $2,000 to $3,000 in taxes based on their regular charity donations by doing the bunching technique. So, it can be a huge thing if you plan it right.” 

Another option is a donor-advised fund that allows you to make a large, upfront contribution one year for the tax break. Then, it pays out funds to charities over several years. 

For people who have reached the age of 70-and-a-half, there is a third option. You could transfer money from your IRA directly to a charity. It can help you meet your IRA’s required minimum distribution and you do not have to itemize that money transfer for the tax benefit.  

“You can deduct your standard deduction of $24,000 or $12,000 and get the charity donation on top of that standard deduction,” explained Butler. “So, it can be a double benefit.” 

But, before you send any money to any charity, to get the tax break you need to make sure it is the real thing. Services like Charity Navigator, Guidestar and the Better Business Bureau’s Wise Giving Alliance can help you evaluate and choose a qualifying charity.  

You will also need to show the IRS proof of your donation, so be sure to save receipts. If you are donating something non-cash, like clothes, furniture or an old car, document the value of your gift. 

“You have to determine what the fair market value is or what could you go and turn around and sell it for,” Butler said.

If the item is more than $500 in value, your deduction will be based off of whatever price the charity sold it. 

If donating by check, it has to be postmarked no later than Dec. 31 for the contribution to count during the 2018 tax year. And on a credit card, so long as the charge goes through on or before Dec. 31 it counts, even if you pay the credit card bill in 2019. 

KSL 5 TV Live

Top Stories

Local News

Zane James...
Madison Swenson

$4 million settlement reached in officer-involved shooting of Zane James

A Utah family has reached a $4 million settlement with the city of Cottonwood Heights in relation to the shooting of their 19-year-old son by a city police officer.
1 day ago
...
Madison Swenson

8-year-old boy hit by car while riding scooter in Riverton

An 8-year-old boy was rushed to the hospital Friday after he was struck by a car in Riverton.
1 day ago
...
Mike Anderson

Study aims to balance growth, preservation around Bear Lake

Bear Lake brings nearly $50 million into the Northern Utah economy each year, all while it continues to serve as a major water source. A new study is taking a close look at those impacts on Rich County.
1 day ago
...
Dan Spindle, KSL TV

AAA Gas calculator shows cost for your holiday road trip

Millions of Americans are planning to travel this Independence Day weekend despite record-high gas prices.
1 day ago
...
Shara Park

Three moose take a dip in a North Salt Lake pool

A wild sight in North Salt Lake this week as three moose have made themselves at home in pools and on Eaglewood Golf Course.
1 day ago
...
Ladd Egan

SLC firefighters urge residents to obey fireworks restrictions

As we head into the holiday weekend, firefighters in Salt Lake City are urging residents to obey firework restrictions.
1 day ago

Sponsored Articles

hand holding 3d rendering mobile connect with security camera for security solutions...
Les Olson

Wondering what security solutions are right for you? Find out more about how to protect your surroundings

Physical security helps everyone. Keep your employees, clients, and customers safe with security solutions that protect your workplace.
Many rattan pendant lights, hay hang from the ceiling.Traditional and simple lighting....
Lighting Design

The Best Ways to Style Rattan Pendant Lighting in Your Home

Rattan pendant lights create a rustic and breezy feel, and are an easy way to incorporate this hot trend into your home decor.
Earth day 2022...
1-800-GOT-JUNK?

How Are You Celebrating Earth Day 2022? | 4 Simple Ways to Celebrate Earth Day and Protect the Environment

Earth Day is a great time to reflect on how we can be more environmentally conscious. Here are some tips for celebrating Earth Day.
Get Money Online...

More Ways to Get Money Online Right Now in Your Spare Time

Here are 4 easy ways that you can get more money online if you have some free time and want to make a little extra on the side.
Lighting trends 2022...

Lighting Trends 2022 | 5 Beautiful Home Lighting Trends You Can Expect to See this Year and Beyond

This is where you can see the latest lighting trends for 2022 straight from the Lightovation Show at the Dallas World Trade Center.
What Can't You Throw Away in the Trash...

What Can’t You Throw Away in the Trash? | 5 Things You Shouldn’t Throw in to Your Trash Can

What can't you throw away in the trash? Believe it or not, there are actually many items that shouldn't be thrown straight into the trash.
Charities Concerned Tax Law Could Lead To Drop In Donations