You may want to give your 2018 charity donation before 2017 ends

Taxpayers who maximize their potential tax deductions through year-end charitable contributions may want to consider giving both their 2017 and 2018 donations before Jan. 1 due to changes in the 2018 tax bill, a Washburn professor said.

Under the tax bill, standard deductions rise from $6,350 to $12,000 for single people and from $12,700 to $24,000 for married couples.

“For those who itemize, it’s a big issue,” said Roger McEowen, Kansas Farm Bureau professor of agricultural law and taxation at Washburn University School of Law.

The roughly doubled standard deductions is an incentive for taxpayers to take that deduction rather than itemize their deductions, including charitable contributions, home mortgage interest and medical expenses.

However, McEowen said deciding which deduction route to take depends on if you can receive more than the standard deduction through itemization.

“The idea is to get at least $24,000 in tax benefits (for married couples) either through standard deduction or to get that much in itemized deductions,” he said.

The Tax Policy Center estimates that 38 million of the 45 million filers who itemize would opt for the standard deduction under the new tax bill.

In 2015, the most recent year of IRS data available, 341,930 of 1,339,150 Kansas tax filers itemized their deductions.

In the new tax bill, “if what remains (in your itemized deductions) would add up to be less than $24,000 (or $12,000 if you are single), then you are better off to just take the standard deduction and not get the benefit from charitable giving,” McEowen said.

If you prefer to itemize your charitable contributions and do not think you will meet the standard deduction amount, McEowen said there may be a way to maximize those contributions — but only every other year.

To do so, you must give what you plan to donate in 2018 before this year ends, which is then in addition to your 2017 contribution.

“Go ahead and donate now (for both years) because you’re going to lose your benefit if your itemized deduction would be less than $24,000,” he said.

If you do pay forward, McEowen recommends taking the standard tax deduction the following year.

“Hold off in 2018 and then write another big check in 2019,” he said.

To maximize deductions, McEowen said, those who can receive more than $24,000 — or $12,000 if single — in deductions every other year should itemize during those years.

“You can still find a way to get that charitable tax deduction (through an every-other-year strategy),” he said.

In 2015, taxpayers gave $373 billion to charity, “so it’s big,” McEowen said. According to IRS data, 282,450 Kansans in 2015 made charitable contributions, for a total of about $1.9 million.

Because of the tax changes, McEowen said charitable donations are likely to drop by as much as $13 billion nationwide.

In Wichita, the United Way of the Plains is prepared to help those who would like to give their 2017 and 2018 donation before the year ends, said president and CEO Pat Hanrahan.

He said they are not yet encouraging those who donate for tax purposes to give both their 2017 and 2018 donation, but he said that is certainly an option the nonprofit is looking at.

This story was originally published December 23, 2017 at 3:41 PM with the headline "You may want to give your 2018 charity donation before 2017 ends."