"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.

WSJCharitableDonDeduc.jpg

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.”

https://www.wsj.com/articles/wsj-tax-guide-2019-charitable-donation-deduction-11550235600?emailToken=0a9c5b579dca44d0507320fbdb72a9b6D3QJirZ7RUzXF+RcL0b1KirSGFY9NQ1l8N+nD/Ct6yZbtPYVBydbAoeGgchcZsUAgWym3jozqfdRXxxBKFBSqtdcm8pwVELJsjDqMFOu1sI%3D&reflink=article_email_share