The Charitable Deduction and 2018 Income Tax Returns

By Attorney Christine S. Anderson

February 2019

It is February. I always do my taxes early. I withhold more than I owe. I usually get a sizeable refund. I don’t mind doing my taxes as much as some of the other household chores I sometimes do on the weekend. This year was no different, I finished my return in February.

Charitable giving is a topic about which I am passionate for many reasons. I have been fortunate. It is important to give back. The tax deduction is nice, too. I give generously to my favorite charities. I also give to several others. My father-in-law is also passionate about charitable giving. We give to his favorite charity in his honor instead of buying him gifts. He loves that. I collect all the receipts for my charitable donations and keep them organized during the year. I meticulously enter them in to Turbo Tax. When I finished my tax return this year, I experienced a real aha moment.

Although I read the commentary about the concerns of the charitable community regarding the effect of the 2017 Tax Cuts and Jobs Act (TCJA) on charitable giving, and I even wrote a blog article which we posted in May of 2018 expressing skepticism about the concerns about the effect of the TCJA on charitable giving, I did not really get it until a couple of weeks ago when I did my own return.

I file a joint return with my husband and we got the $24,000 standard deduction. The charitable gifts that we made throughout 2018 did not make any difference on what we owed in income tax for 2018.I wondered, “Will this change what I donate in 2019?” Probably not. Will this change what others give to charity in 2019? I wonder.

Bunching or bundling charitable contributions so that they have a greater impact on income taxes seems to be the only work around. The idea is to make two years’ worth of charitable donations in one year, in which you would get the benefit of the charitable deduction and then none in the next. For example, instead of making donations in December of 2019 and 2020, skip the donation in December 2019 and make both donations in 2020: one in January and one in December. For more information on bunching charitable donations see the article posted on the New Hampshire Charitable Foundation website last November.

The TCJA did not change the unlimited charitable deduction for gift and estate tax purposes.

It will be fascinating to see what the data reveal about whether the TCJA changes to the charitable deduction will affect how people give to non-profits. I am a glass half-full kind of person. I believe that people will continue to give generously regardless of the tax effect. We’ll keep you posted.