Nonprofit organizations across the country are concerned with the new tax reform law, TCJA, that was “championed” by President Donald Trump as it is expected to impact how much individuals donate to charities going forward. In the past, taxpayers were given an incentive to donate to charities. They would give a donation to a charity of their choice and, in return, write off these donations and itemize them, which would reduce their taxable income.
Now, under the new tax reform law, there may be no need to itemize since the standard deduction has nearly doubled for individuals and couples. And that could mean fewer donations are being made to charities who truly need the funds. Here are some of the changes that are likely to discourage charitable giving according to Forbes:

  • It lowers individual income tax rates and reduces the value of all tax deductions.
  • The new standard deduction for individual filers is set at $12,000, and $24,000 for couples who are filing together.
  • The new law will nearly double the estate tax exemption to $22 million for couples, which will “discourage tax-motivated bequests by some very wealthy households.”

It is expected that the law will “cut the number of those itemizing their charitable contributions by more than half, to about 16 million. The share of middle-income households claiming the charitable deduction will fall by two-thirds, from about 17 percent just 5.5. percent.” The trouble with the law is if you don’t itemize, you won’t be able to deduct your charitable donations.
CBS News pointed out that if you were to receive an additional $1,000 in your paycheck and receive no incentive to give to charity, while people may continue to donate, the amounts given may be reduced significantly. And for every single person or family that reduces what they donate, it eventually will add up to large amounts which will affect how these charities are able to provide to those in need. Brian Gallengar, who is the CEO of United Way, which is the country’s largest privately funded charity, says his organization currently collects $3.5 billion in donations on a yearly basis. But after the new tax reform law, he expects to take in $300 million less each year. That, in turn, could significantly impact their efforts to provide food, clothing, and other forms of assistance to those in need.
Although taxpayers don’t give to charities just to receive a tax incentive, without it, they may be less inclined to donate as much as they were giving in the past. But, only time will tell how the new tax reform law has impacted charities and by how much.
Are you dealing with a tax-related issue or have a question pertaining to a tax return that has been filed in the past? If so, contact a local Atlanta, GA tax lawyer who can assist you with your matter.

New Tax Laws, New Rules

Whenever a new tax law is passed, it is important for taxpayers to understand what effect it will have on them. If you are someone who has questions pertaining to certain tax laws or have a personal question in regards to your own tax return, don’t hesitate to contact so you can be connected with a qualified and knowledgeable tax attorney in Atlanta, GA who can provide you with the clarification you are looking for.

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