@Hopeful820, our donations will continue as DH and I keep downsizing our household. Not moving residences, but giving away things that others can use. My big accomplishment this year was reducing the contents of my closet by half. It helps to be on our local charity’s call list. They pick up at my house every two months.
Our donations will remain the same, they weren’t for tax purposes, and it’s not like we’re giving huge amounts. Now someone please tell all the solicitors that keep constantly calling. We’re going to keep itemizing anyways.
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Will tax reform affect your donations?>>
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I haven’t itemized in 15 years. It doesn’t change anything. I’ve moved several times and donated truckloads of stuff.
Even when we itemized, I never wrote off the stuff we gave to Goodwill… We will continue donating stuff and $$ as we used to.
I encourage you to keep donating if you can, even small amounts. I work with a variety of charities, and there is very serious concern about the loss of a tax incentive. These charities really rely on donors who provide $25 a few times a year. I can tell you that I’ve been on the ground, witnessing these charities in action and they do incredible work. Your gifts, every single penny of them, matter more than you know. If you can, keep up the charitable giving. It feels good to help and you’re making a difference – even if the politicians would rather give those financial incentives to private jet owners rather than supporters of charity.
The Goodwill donation deduction is a tax scam, anyway. According to Goodwill of Santa Clara County, they realize only sixty cents per pound of donated goods. That is, on average, for a pound of your donated goods, they sell them for sixty cents in their store. The Goodwill executive who told me this assured me that Goodwill of Santa Clara County was around the national average in this statistic.
I donate stuff to the thrift store to get the stuff out of my house. I don’t bother getting the receipt. The local thrift store is part of an organization that supports developmentally disabled youth.
My other charity donations are also done because I want to support the organizations. I don’t do it for the deduction but we will continue to itemize so my deductions won’t be changing. I do volunteer with an organization that depends on donations and some grants. They are very concerned as they operate on a very lean budget.
I can see people continuing to donate ‘stuff’ as people clear out what they no longer need or use. But I would guess that monetary donations will decrease under the new tax code.
If you are giving $50 or $100 to some place, are you really not going to because of tax issues?
There are two scenarios as I see it.
1 - My itemized deductions exceed $24K, so I will be itemizing, and my donations are still deductible.
2 - My itemized deductions will be less than $24K, so by taking the standard deduction I am getting a bigger deduction than if I itemized, so I don’t care if my donation can be deducted or not, I still come out ahead.
I hope people don’t let the tail wag the dog and stop donating because they think they are losing out somehow.
I won’t change my donations due to this because they don’t usually have much of an impact anyway since a lot of what I do I don’t get receipts for.
What I did do today was try to guesstimate how much my state taxes will be for 2017 and pay down just enough property taxes to make the remainder for 2018 add up to $10K. I had asked H to contact the accountant and ask about AMT, but he didn’t.
But I read that this, estimating tax and prepaying it, isn’t allow to be deducted. You have to have received a bill and pay a defined tax amount.
Most people who donate enough to matter for taxes will figure out a way to make it still work. My kids went to a school where the auction brought in about $200k. A few of the big items will still be donated through a business (a car or a trip), all the other people will continue donating gift cards and photography sessions and teeth cleanings (we had a lot of dentists!). And they will keep buying the donated items and buying raffle tickets and supporting the school.
Some church members will continue to tithe because that is their belief, with or without the tax deduction.
It will be a good sociological study to see the impacts of this tax reform on charitable donations by Americans, and it would be doubly interesting to see the comparisons among the different income strata. I agree with @collage1 that monetary donations will drop significantly in 2018 after a specially bumper year of 2017.
For property tax this is true, you have to have received a bill in 2017. But you don’t have to pay the entire bill, you can pay whatever part of it you want in 2017, and then pay the rest later.
For state income tax, you can make an estimated payment that will apply to your 2017 taxes in 2017, and it will be deductible in 2017. What you can’t do is make an estimated payment in 2017 and have it apply to your 2018 taxes.
Just a note on donations. If you buy a lot on Amazon, find out whether your favorite charity is on Amazon Smile. No tax deductions here, but you can set it up so that every time you buy, your chosen charity gets a small percentage of what you spend. (Very small, it is 0.05%, but those small donations add up).
will echo what @calmom said. For the small non profit that I’m a board member of , just my Amazon purchases in 2017 have generated $7.32. Doesn’t seem like a lot, and I only placed 22 orders this year…but it’s a super simple, effortless way to help. BTW, I believe the non profit (barely three years old), has received close to $300 to date. We’re small, we’ll take it!
Anyone considering following the advice of @notrichenough on paying estimated state taxes this year should do some research first. You will find answers like this: https://money.stackexchange.com/questions/62872/overpay-state-income-tax-this-year-to-offset-federal-taxable-income-to-the-next Specifically, any payment that exceeds a reasonable estimate of your actual taxes is not going to be deductible – and trying to deduct it will only buy you trouble.
If you overpay state income taxes, when the state issues a refund the following year, it will be reported on form 1099 G.
If you took a deduction on the 2017 tax for estimated payments, then whatever amount is on the 1099G will be income that needs to be reported on your 2018 tax return.
So it won’t won’t work to deliberately overpay.
My concern, @calmom, is not so much with people needing to report a refund as income in 2018 as with the potential liablity for claiming a false deduction for an unsupported deduction in 2017, but I’ve had my say and people can do as they like.
Well I think it woud have to be pretty far out of sync for it to create a problem.
@calmom : Please see #211 on page 15. That is the sort of advice that troubles me. If a person has used withholding to satisfy their tax obligation in the past, and nothing has changed, I find it hard to see an explanation for a last-minute estimated tax payment in any amount that would make a significant difference. Estimated payments are intended for people who do not have a source of income that is amenable to scheduled withholding. They are not intended to allow someone to try to scam the system.
Now, that’s not to say someone couldn’t get away with it. The IRS has been understaffed and overworked for some years, and 2018 is going to be their own annus horribilis as they deal with the massive changes effected by the GOP tax bill. I still do not recommend trying it.