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How tax law changes may impact charitable giving in 2017 versus 2018

We at One Health Organization listened to the news about the likely changes in the tax laws and how it will impact charitable giving from 2017 to 2018. We attended a national webinar hosted by professionals discussing this matter and consulted a few of our local experts on the topic. You probably want to know how it can impact your charitable giving.

Simply put, even after the tax laws change, there's no single "one size fits all" tax advice that can be given to anyone since everyone's personal and financial situation differs. The tax laws are still going to be complicated in 2018.

So how will things change? As mentioned above... It depends. I'll give you one example that I discussed with One Health Organization Board Treasurer Shaun Zalewski, CPA of Skoda Minotti.

Let's say that in 2017 and in 2018 your personal and financial situation is the following:

  • you're married
  • you file jointly with your spouse
  • you're not subject to phase out rules or Alternative Minimum Tax (AMT)
  • you donate a total of $7,500 to 501(c)(3) charities
  • you pay $20,000 in real estate taxes
  • your mortgage interest was $3,500

In 2017, 100% of the above ($7,500 + $20,000 + $3,500 = $31,000) "counts" towards your itemized deduction. Also, it's above the 2017 standard deduction rate of $12,700 given your personal situation. 

In 2018, the maximum you can deduct for your real estate taxes will be $10,000 and the standard deduction rate rises ($12,700 to $24,000 in this scenario). That means that your itemized deduction is valued at a total of $21,000 ($7,500 + $10,000 + $3,500) instead of $31,000 and is LOWER than your standard deduction rate of $24,000.

Bottom line for you in the above example:

  • In 2017, you'd be able to deduct a maximum of $31,000
  • In 2018, you'd be able to deduct a maximum of $24,000

So if you care about reducing your taxes through charitable giving, the best advice we can give you is to talk to your trusted team of advisors, which may include:

  1. Tax preparer
  2. Financial advisor
  3. Lawyer

Things to discuss with them to reduce your taxes in 2017 is whether you should consider donating appreciated securities, such as stock, donating (some of) your Required Minimum Distribution (RMD) from your IRA (if you're at least 70 1/2 years of age), or even setting up a Donor Advised Fund. But the end of 2017 is coming soon, so act fast!

It's clear that the changes in the proposed tax laws will not be good for nonprofits, like One Health Organization, UNLESS everyone gives to 501(c)(3) charities because they believe it's simply the right thing to do. While we wish that everyone who donates money to charities gives out of the goodness of their hearts, realistically we know that some are (more) interested in the tax benefits they receive.

Nonprofit charities like One Health Organization will need your financial support more than ever given the change in tax laws. Please keep giving to charities you can trust, like One Health Organization. You know you can trust they're legitimate charities if they have a 501(c)(3) IRS designation, which can be confirmed on GuideStar. Check out our Platinum Seal of Transparency at GuideStar.

We hope you found the information above helpful to you.

Written by Dr. Anna M. van Heeckeren, MS, DVM in consultation with the following experts in this field:

As indicated above, this is NOT INTENDED as tax advice. This is only for your information.