"WSJ Tax Guide 2019: Charitable-Donation Deduction"

“The number of tax returns claiming deductions for charitable contributions is expected drop by more than 50% as a result of the overhaul. For 2018, about 15 million filers will take this write-off, compared with about 36 million for 2017, according to the Tax Policy Center.


Here is why. The standard deduction for 2018 is nearly double the level for 2017, rising from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for couples filing jointly. For 2019, it rises to $12,200 for singles and $24,400 for couples.

The standard deduction is the amount filers can subtract from income if they don’t list “itemized” write-offs for mortgage interest, charitable donations, state taxes and the like on Schedule A.

As a result, a filer’s itemized deductions for 2018 will need to be greater than new standard-deduction amounts for the filer to benefit from itemizing.

Say that Jane and her husband, Robert, donate $10,000 to charities each year, but their mortgage is paid off and their only other itemized deduction is $10,000 of state and local taxes, for a total of $20,000.

This couple itemized deductions on Schedule A for tax year 2017, because the $20,000 total exceeded their $12,700 standard deduction. But for tax year 2018, they will opt for the standard deduction of $24,000, because it exceeds the $20,000 total on Schedule A.

This means that Jane and Robert won’t get a specific tax benefit for giving to charity on their 2018 return—a change that is worrying charities that rely on donations from filers who aren’t wealthy.

For charitable donors who want a tax break, there are ways around this change. One is to “bunch” donations every few years to surmount the higher standard deduction. If Jane and Robert donate $20,000 every other year, they could itemize in those years and claim the standard deduction in the years they don’t donate.

Givers should also consider so-called donor-advised funds. These popular accounts enable donors to bunch smaller gifts into one large amount and take a deduction in the year of the gift. The donor can then designate charities as recipients later. Meanwhile, the assets can be invested and grow tax-free, although the accounts have fees.

Donors who are 70½ or older have another good strategy if they have individual retirement accounts. Many can benefit from contributing up to $100,000 of IRA assets directly to one or more charities.”