How the 2018 Tax Reform Affects Your Giving

“Does the new tax law take away my tax benefit when I make a contribution to the Foundation?” At the RLS Foundation, we have been hearing...

“Does the new tax law take away my tax benefit when I make a contribution to the Foundation?”
At the RLS Foundation, we have been hearing this question from many of our donors, supporters, members and friends. We consulted with tax experts, and based on their analysis, we believe the correct answer is, “Probably not, but it depends.” In fact, the new tax law has actually made charitable giving more affordable for many donors!

Don’t believe the headlines

You may have heard reports that charities like the RLS Foundation risk losing millions of donations because more taxpayers may qualify for the newly doubled standard deduction (up from $12,000 to $24,000 for married taxpayers filing jointly, with an added $1,300 for each spouse age 65 or older).
But depending on their circumstances, this higher standard deduction could mean donors have more money available to support their favorite causes. Moreover, the newly lowered tax brackets mean that donor incomes may be taxed at lower rates overall.
If the new law generates greater tax savings for someone, then part of those savings is available to donate. The surprising result may be that the new tax law actually increases charitable giving.

More advantages to giving! 

Meanwhile, the new tax law has created or maintained other tax advantages that specifically benefit charitable giving:
  • There is a cap on how much of a contribution may be deducted in a year when comparing that gift to the taxpayer’s income. The new law raised that cap from 50 percent of income to 60 percent, which could allow for a larger annual tax deduction. 
  • Also, people age 70 1/2 or older who must take an annual required minimum distribution (RMD) from their IRA can continue to make a qualified charitable deduction (QCD). This allows them to make a contribution of up to $100,000 directly from their IRA to a charity – which can satisfy part or all of their RMD (or exceed it) but not count as taxable income. And, they can still take a standard deduction on top of it. 
  • The new tax law continues to offer the opportunity to donate appreciated stock and deduct the increased value, subject to a 30 percent limit of taxpayer’s income. The amount over the 30 percent of income can be carried over for up to five years and deducted in future years. 

Keep on believing

The question every donor should ask him or herself is: “Why do I give?” At the RLS Foundation, we feel (and studies have shown) that donors give first and foremost because they believe in the causes they support.
Getting a tax benefit is a nice bonus, but what motivates supporters like you to make a gift, whether it’s $25, $250, or even $25,000 or more, is knowing that you’re doing your part – connecting personally to a mission that’s important to you. We give because we care. The new tax law doesn’t change this fact at all.
So, our advice to all our supporters is to look past the gloomy headlines from last fall and winter. Speak with your tax advisor about ways to maximize your tax benefits. ... And, when it comes to our work to find a cure for RLS (and the other worthy causes you support) – keep on believing!
The possible tax advantages of charitable giving described above are illustrations only and may not apply to specific taxpayers’ circumstances. To determine whether you may have tax benefits associated with charitable giving, consult with a certified public accountant, tax return preparation specialist or other qualified financial adviser.

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