* An
interesting development. Kelly Phillips
Erb reports “Charitable Donation Deductions Plummet After Tax Reform” at FORBES.COM.
“According to the most recent data available from
the Internal Revenue Service (IRS), just 12,177,779 taxpayers claimed the
charitable donation deduction for the 2018 tax year, totaling $102.7 billion.
That compares to 33,629,985 taxpayers who claimed the charitable donation
deduction for the 2017 tax year, totaling $160 billion. That’s a difference of
21,452,206 taxpayers claiming nearly $37 billion less in donations.”
If I may be allowed one correction – it should read “After
GOP Tax Act” and not “After Tax Reform”.
The GOP Tax Act was, as its official title identifies, a tax cut and NOT
tax reform.
This news does not necessarily mean that Americans
are actually donating less to charity – it just
means that they are claiming less tax deductions for charitable giving. In order to deduct a charitable contribution,
one must itemize, and the GOP Tax Act resulted in a substantial decrease in the
number of taxpayers who itemize. While
being able to deduct one’s contributions is a plus – the tax savings from itemized
deductions is pennies on the dollar. Giving
$100 to charity may put $22 back in your pocket via an itemized deduction, but you
are still out of pocket $78 – so I doubt very much that people give to charity only
to get a tax deduction.
However, it may mean that the taxpayer in the
above example will only donate $78 to the charity instead of $100 if they are
unable to benefit from itemizing. In a
tweet responding to a comment on the post KPE tells us studies suggest that actual
contributions are also down.
And let’s be honest. While the issue is not as bad
as it had been these past few years - a result of the more stringent documentation
requirements - the amount of charitable contributions reported on Schedule A does
not necessarily accurately reflect the actual amount of charitable
contributions made. This category has
historically been the one where taxpayers have truly been “generous” in their
estimations (i.e. – “same as last year” or “whatever I am allowed”).
* Yesterday’s post at BOBSERVATIONS talked about “Found Money” – how I found it and how you can, too.
* In light of Hurricane Dorian Kay Bell
explains “IRS and other government resources can help you deal with a natural disaster” at DON’T MESS WITH TAXES.
* And Kay reminds us not to forget about our four-legged
“children” during a disaster with “7 tips to ensure your pets' safety during a disaster”.
* From ACCOUNTING TODAY – “Opportunity zones andcapital gains: What your clients need to know”.
* Just got the word from NATP -
“The General Services Administration (GSA) has
released the federal domestic per diem rates for 2020. The IRS permits
taxpayers to use these rates to substantiate business expenses for lodging,
meals and incidental expenses incurred while traveling away from home.”
The new rates are effective October 1, 2019. Click
here to access them.
THE FINAL WORD
Cutting taxes is not the answer to all of our
problems. Taxing the rich, merely
because they can afford it, is not the answer to all of our problems.
We must understand and acknowledge that the one and
only purpose of the US Tax Code is to raise the money necessary to run the
government – and should not be used for social engineering, to redistribute
income or wealth or to deliver social welfare and other government benefits.
The Tax Code must not punish ambition,
entrepreneurship or success. While it
can be used to encourage savings, investment, and growth, it must not encourage
or discourage specific economic decisions, or provide exclusive benefits for
specific industries, business activities, or classes of taxpayers.
TTFN
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