RENO, Nev. (KOLO) It's a busy time of year for the Catholic Charities donation center. All anyone has to do is drive up and drop off items, which will be sorted there and put out on the sales floor.
Each time donors are offered a receipt, which can be used for tax purposes. But this year because of a new tax structure, deducting charitable contributions on your taxes may not be as straightforward.
“It is my favorite answer; it depends. The standard deduction for a married couple filing joint was $12,700; that is now to almost double to $24,000. And what that does, in effect, is make the target for whether you are going to itemize or not a lot higher,” says Kirk Gardner, a CPA and partner with Eide Bailly.
Estimates show before the new tax laws, about 30% of taxpayers itemized. With the new tax law, that number could go down to about 10%.
Taxpayers may find the increased standard deduction will lower their tax bills more than itemizing did, and they'll end up not taking the charitable deduction.
This is not news to places like Catholic Charities. They and other non-profit organizations say they can't predict what will happen now or in the months to come as people start preparing their taxes.
“Really, what we have seen so far is our giving is right on track with what it was last year and two years ago. Both in those tangible donations but also in our regular contributions as well,” says Marie Baxter, Executive Director of Catholic Charities.
Baxter says she believes most people give because they believe it's the right thing to do. She says those who donate because of a tax break also believe in charitable giving; they simply may need to look at ways to make charity and capitalism work.
“Designating part of a life insurance policy, or bunching your donations through a donor advice fund,” says Baxter.
Gardner suggests saving those contributions and using them every other year.
“So that every other year make twice the amount you would normally make. And then on that alternate year you will be above the standard and you will get some itemized deductions. But you have to see what the numbers work out as,” he says.
Watch and listen for charities to heavily focus on the important reason for giving—aside from the tax benefit.
As most people understand, there’s probably more than on reason to support the charity of their choice.