Itemizing Deductions in 2017?
Charitable giving is always a worthy goal and donors should not let tax laws determine their giving objectives. None-the-less, many Americans are asking how the new tax law will likely affect their charitable giving. We’ve noticed a number of articles by the financial community about the topic of gifts now that the outline of the bill is more clear. For example, Charles Schwab said, “… the proposed tax changes …would prompt many taxpayers who currently itemize deductions to take the increased standard deduction instead. In short, it’s not that anything is changing with the charitable deductions—it’s that fewer people would itemize any deductions under the proposed tax law.”
If you don’t currently itemize deductions, you won’t be affected by the new law. Currently, only about 30% of taxpayers itemize their deductions, according to the IRS. Once the legislation is signed into law, it has been estimated that fewer than 10% of taxpayers will continue to itemize.
In addition, tax rates will be lower which will also reduce the benefit of itemized deductions. Another, equally important factor, is the zooming stock market. Appreciated assets, including those in 401(k) accounts, are especially valuable for those wishing to lower their over-all tax bill. For that reason, donors may find it advantageous to accelerate their 2018 giving into 2017. However, to be assured of that benefit, the gift must occur in 2017. If you have questions about how these changes could affect your plans, you should discuss them with your financial advisor.