Tesla Model X - Business? Pleasure? Both and with a possible tax write-off.
Charitable Giving and the New Tax Law
The new tax bill passed at the end of 2017 increases the standard deduction (12,000 for Single, 24,000 for Married) which will reduce the number of taxpayers that will need to itemize their deductible items. According to a study by Indiana University charitable giving, being one of the major deductible items, is expected to decrease by up to $13.1 billion this year.
This would conclude that much of the incentive of giving to a charity is tax driven. Unless one is extremely charitable, or has other deductible items exceeding the new threshold, giving or not giving will have little or no impact on taxes.
OK - so there must be a loophole, Right? A concept known as bunching is becoming a more popular idea and may be advantageous with some planning. If a taxpayer has itemized deductions that are discretionary, such as large charitable giving, bunching two or three years of giving into one year may result in higher deductions overall and lower your tax bill.
Example:
Carl and Jane have mortgage interest of $15,000, state income/property tax of $5,000, and charitable giving of $4,000 to their church. If they itemize, or take the standard deduction it's a push - 15,000+5,000+4,000=24,000 (the standard deduction).
If Carl and Jane give 2 years of donation ($8,000) to their church in one year, and skip the next, they would report $28,000 of itemized deduction the first year, and take the standard deduction the next resulting in $4,000 more deduction (in a 22% bracket that is $880 less taxes just because of timing.)
If Carl and Jane live in Idaho, Tennessee, or Utah, they can do the same with their state withholding for additional bunching without penalty (pay both year's liability in one year).
Planning is the key to taking advantage of the new tax laws.
