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Re: “Year-end donations benefit charities, boost tax donations,” front page, Saturday:
Your Dec. 29 article on charitable deductions ignores one key fact: Charitable deductions in tax year 2018 are unlikely to be claimed by the vast majority of taxpayers. The 2017 Tax Cuts and Jobs Act includes an increase in the standard deduction to $24,000 for a married couple filing jointly, which means that itemizing deductions will not be helpful to taxpayers with less than $24,000 in deductions.
Few taxpayers will have deductible contributions exceeding the new standard deduction and will choose to use the standard deduction instead of itemizing. If you use the standard deduction, you cannot claim a deduction for charitable donations, such as support for your church, the United Way or other charities. Fidelity Charitable estimates that the number of tax returns itemizing deductions will drop from 37 million last year to 16 million this year.
I am surprised that none of the nonprofit directors you interviewed for this article brought up the tax law change. Nonprofits lobbied against the change a year ago, but Congress passed and President Trump signed the bill that will almost certainly reduce revenues for nonprofits. Donors are motivated by many factors, including generosity, commitment to a cause and religious faith. A preference to give money to a charitable nonprofit instead of the IRS is also a factor, but the new tax law will eliminate that motivation for most taxpayers.
Many donors will continue to give to good causes, but the lack of a tax deduction for donations has already begun to curtail charitable donations. The Tax Policy Center reports that charitable donations declined 6.3 percent in the first quarter of 2018 compared to the same period in 2017.
The news for December 2018 is not that donations are tax-deductible; it is that most taxpayers will not be able to claim charitable donations when they file their 2018 taxes. Ignoring that key fact could mislead your readers.