March 9, 2018
Whether you’re claiming charitable deductions on your 2017 return or planning your donations for 2018, be sure you know how much you’re allowed to deduct. Your deduction depends on more than just the actual amount you donate.
Type of gift
One of the biggest factors affecting your deduction is what you give:
Cash. You may deduct 100% gifts made by check, credit card or payroll deduction.
Ordinary-income property. For stocks and bonds held one year or less, inventory, and property subject to depreciation recapture, you generally may deduct only the lesser of fair market value or your tax basis.
Long-term capital gains property. You may deduct the current fair market value of appreciated stocks and bonds held for more than one year.
Tangible personal property. Your deduction depends on the situation:
Use of property. Examples include use of a vacation home and a loan of artwork. Generally, you receive no deduction because it isn’t considered a completed gift.
Services. You may deduct only your out-of-pocket expenses, not the fair market value of your services. You can deduct 14 cents per charitable mile driven.
First, you’ll benefit from the charitable deduction only if you itemize deductions rather than claim the standard deduction. Also, your annual charitable donation deductions may be reduced if they exceed certain income-based limits.
In addition, your deduction generally must be reduced by the value of any benefit received from the charity. Finally, various substantiation requirements apply, and the charity must be eligible to receive tax-deductible contributions.
While December’s Tax Cuts and Jobs Act (TCJA) preserves the charitable deduction, it temporarily makes itemizing less attractive for many taxpayers, reducing the tax benefits of charitable giving for them.
Itemizing saves tax only if itemized deductions exceed the standard deduction. For 2018 through 2025, the TCJA nearly doubles the standard deduction ? plus, it limits or eliminates some common itemized deductions. As a result, you may no longer have enough itemized deductions to exceed the standard deduction, in which case your charitable donations won’t save you tax.
You might be able to preserve your charitable deduction by “bunching” donations into alternating years, so that you’ll exceed the standard deduction and can claim a charitable deduction (and other itemized deductions) every other year.
For many business owners, September tends to bring a bit of a slowdown. The chaos of getting kids prepared for going back to school has passed, and a focus on saving money tends to kick in as people prepare for the coming holiday spend. Combined, this can often translate into a lull for business owners.
Mattison, Yoder is pleased to announce Julie Cummins has joined our team! Julie is the new face at our front desk, replacing Chris Bailey. Don’t worry Chris is not leaving the firm, she is moving up to a full-time bookkeeping position here!
Julie will be taking on many responsibilities that come along with being at the front desk, such as greeting you when you visit our...
This is a friendly reminder that the Q3 tax estimate payment deadline is coming up fast. Be sure to make your payment by September 15, 2018 to avoid penalties. Currently, penalties for late or no payment average about 4 percent. And wouldn’t you rather keep that money in your pocket?