Five Issues to Consider When Making Charitable Donations

Do you plan on making contributions to charity this year? If you’re in a giving mood, you may be rewarded with sizable charitable deductions on your tax return. But the tax law is fraught with numerous twists and turns, so you must be careful to navigate the rules.

Important: Under the Tax Cuts and Jobs Act (TCJA), the standard deduction was effectively doubled, while certain itemized deductions (including for charitable donations) were scaled back or suspended for 2018 through 2025. For 2019, the standard deduction is $12,200 for single filers and $24,400 for joint filers. As a result, you may not itemize deductions this year, even if you’ve consistently done so in the past. The bottom line is if you don’t itemize and take the standard deduction, you can’t deduct charitable donations.

Before you go any further, assess your current situation. All other things being equal, you might want to “bunch” charitable donations in a year in which you expect to itemize — whether it’s this year, next year or the one after. Otherwise, you get no tax benefit from your generosity. Your tax advisor can help you crunch the numbers.

Here are five other key tax issues relating to charitable donations.

1.Tax-exempt status. You’re not guaranteed a tax deduction just by contributing money or property to a worthy cause. To qualify for deductions, the recipient organization must meet the requirements for tax-exempt status.

Generally, an organization will qualify under Section 501(c)(3) of the tax code if it provides services in one of these categories:

• Educational;
• Religious;
• Charitable;
• Scientific;
• Literary;
• Public safety;
• Certain amateur sports competitions; or
• Prevention of cruelty to children or animals.

If you contribute to a charity designed to benefit a single person, not a group, you can’t deduct the donation, despite your good intentions. Verify an organization’s tax-exempt status before you {continued}.