The article below is up to date based on the latest tax laws. It is accurate for your 2019 taxes (filed in 2020).
If you plan to donate to a charity before year-end, you may be wondering how the new tax law affects your tax deduction for charitable donations. Here’s the scoop!
Don’t be fooled by scammers — especially in the wake of all of the charitable opportunities following all of the natural disasters. It’s important to make sure you are giving to a qualified nonprofit organization. Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose or that work to prevent cruelty to children or animals. You can check to see whether the organization you play to give to is qualified by going to IRS.gov/TEOS.
Charitable donations are still tax-deductible under the new tax law. While the new tax law made changes to other itemized deductions, the deduction for charitable donations remains intact with few changes. That means you can still claim your donations of money and goods if you itemize your tax deductions.
The few changes that were made to the charitable deduction provision include:
The percentage limit of contributions of cash to public charities increased from 50 percent to 60 percent of your adjusted gross income (AGI).
- While you were able to claim 80% of the donation for personal seat rights like season tickets for college sports events as a tax deduction before the new tax law, you can no longer claim any of the donations as a tax deduction beginning with tax year 2018 taxes (the ones filed in 2019).
Standard and Itemized Deductions
While not a direct change to the charitable deduction provision, another change that could impact whether or not you can still claim charitable contributions if you have before is how the increased standard deduction impacts whether you now take the standard deduction or itemize your tax deductions. TurboTax estimates and IRS data from tax year 2018 confirmed that about 90% of taxpayers will now take the standard tax deduction, up from about 70% prior to the new tax law.
For tax year 2019, the standard deduction increased to $12,200 for single filers and $24,400 on a joint tax return. If you file as head of household, your standard deduction is increased to $18,350. And as in the past, you will claim either the standard deduction or itemize your tax deductions based on your eligible tax-deductible expenses and which option gives you the best tax outcome.
You may be in that category of people for whom the increased standard deduction is greater than their itemized deductions and now may choose to take the standard deduction. For example, if you have $10,000 in state and local taxes (the new limit for property tax, state and local income taxes, personal property taxes and similar taxes), $8,000 in mortgage interest and $2,000 in charitable contributions, that totals to $20,000 of itemized deductions. If you are single, you’ll likely itemize your deductions since $20,000 is greater than your $12,200 standard deduction. But if you are filing as a married couple, you’ll no doubt claim the standard deduction of $24,400 instead of itemizing your deductions, unless you end up with about $5,000 more in itemized deductions.
If you are close to the new standard deduction threshold, you can increase your tax deductions and itemize your deductions by donating by the end of the year. By doing this, you will both be helping someone in need and increasing your tax refund. You can accurately track and value your charitable donations using TurboTax ItsDeductible and transfer your information to your TurboTax tax return.
Don’t worry about knowing whether to take the standard deduction or itemize — TurboTax asks you simple questions about yourself and will give you the option that gives you the biggest tax refund and that you are eligible for based on your entries.
If you have questions, you can connect live via a one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in Spanish and English and can even review, sign, and file your tax return.