With the new tax bill being signed on December 22, 2017 just before the long, Christmas holiday weekend and most of the new provisions taking place on January 1, 2018, there is little time left for 2017 tax planning and executing year-end tax moves. However, a few days remain in 2017 and one very smart tax move for charitably inclined taxpayers who itemize deductions may be to make any charitable donations you are considering for 2018 prior to December 31, 2017.
The reason is this: the new tax legislation virtually doubles the standard deduction and eliminates many other itemized deductions. As a result, many taxpayers will find that their charitable donations no longer provide a tax benefit in 2018. Therefore, it will likely be advantageous for many itemizing taxpayers to make any planned 2018 donations in the year 2017 to take advantage of the lower standard deduction and deduct charitable donations. As a reminder, if you are eligible to deduct your charitable donations, it is not just the cash gifts you make by the end of the year that can be included as itemized deductions; donations of clothing and household goods to eligible charities can also be deducted. So as you are putting away your holiday gifts, clean out those closets and make time to take a trip to your favorite local donation center! Remember, whether your donation is in cash or goods, keep your receipts to support all itemized deductions.
Each taxpayer situation is unique. Taxpayers should consult with their tax advisor to understand if making charitable donations in 2017 will benefit their personal tax situation.
Contact us if you have any questions related to the deductibility of charitable donations or other tax matters.