Income tax filers can expect to see plenty of changes when they go to prepare their taxes this season. In addition to temporarily replacing the existing tax brackets, the Tax Cuts and Jobs Act (TCJA) will also increase the standard deduction amount for all filers, and increase the child tax credit to $2,000.
Taxpayers that want to deduct donations to charity will be required to itemize their deductions, but that amount must be greater than what they would receive for a standard deduction. Mortgage interest, state and local taxes paid, property taxes and medical costs are some of the most common expenses that taxpayers can itemize each year.
If you want to receive the most benefit from your charitable contributions, then ensure that the non-profit you are giving to is a 501(c)(3) public charity or private foundation. Always maintain records of the contribution, like receipts, especially if the amount is greater than $250. Donations of household items can be documented with pictures and receipts from the respective organization that’s accepting them.
There’re also tax savings benefits to donating appreciated stock to your favorite charity. This strategy can help you to avoid the capital gains tax and allow you to deduct the fair market value of the stock. Prior to the new tax law, filers could only take a deduction for cash charitable contributions totaling up to 50% of their AGI. The TJCA increases the limit to 60%.