GRAND RAPIDS, Mich. (WOOD) — The Tuesday after Thanksgiving is known as Giving Tuesday, a day devoted to charities.
If you’re hoping to get back in the form of a tax break come April, you may be in for a surprise. 24 Hour News 8 spoke with a local financial expert on what to do.
Overall, charitable giving is expected to decrease by $17 billion in 2018 because of the new tax law. But in West Michigan, charitable donations are expected to continue despite the effect of the tax cuts and Job Act Tax Bill of 2017, which increased the standard income tax deduction for a lot of taxpayers.
It’s estimated that only about 40 percent of taxpayers who itemized last year will have to itemize in 2018, according to Mark Periard, the director of wealth management at Legacy Trust. Standard deduction increased for those who are married from $12,700 to $24,000.
If you want to get more on your tax return, Periard suggests people “bunch gifts.”
Ways to donate include giving cash gifts through check or credit card, donate appreciated stock to avoid capital gain recognition and qualified charitable distributions from IRA accounts if over 70.5 as well as bunching of gifts.
With higher standard deduction, many taxpayers will not need to itemize charitable gifts for deductions on tax returns. People can bunch the gifts by giving a couple of years worth of gifts to charity in the same year or by creating a donor advised fund and gifting from there annually.
Periard said just as people look at a number of reviews when making purchases, they should do research on entities to which they donate. It includes checking the IRS website to make sure the charity is listed as a 501(c)(3) organization, review mission and purpose of the charity and review form 990 tax returns.
If the form is not found on a charities website, ask if it can be made available.