Meeting with my tax professional recently to prepare my 2018 return, he shared anecdotes of the many clients he serves annually who trimmed back their charitable contributions last year in light of the increase in the standard deduction. It nearly doubled to $12,000 for individuals and $24,000 for married couples filing jointly. Additionally, the write-off for state and local taxes was capped at $10,000. As a result, it’s no longer beneficial for those of us who don’t meet these thresholds to itemize, which is required to take a specific tax benefit for charitable giving.
He said other clients, surprised by the change, predicted they’ll likely reconsider future donations to their favorite nonprofit organizations since they’re unlikely to qualify for the deduction triggered by their generosity next tax season…and beyond.
The Tax Policy Center (TPC) predicts changes in Americans’ standard deduction will shrink the number of filers who deduct charitable contributions from 37 million to 16 million. Late last year, TPC executives estimated that would translate into a drop of $12.3 – $19.7 billion in charitable giving for the 2018 tax year.
While every taxpayer appreciates a charitable break at filing time, it’s only one of the many reasons to support the vital work of nonprofit organizations serving unmet needs across the cities and states in which we live and work.
In addition to bettering the lives of others and our communities, there are physical and psychological benefits for us to reap. Studies have shown that giving time, money and other resources can result in:
- Boosting happiness – giving money to a good cause can increase our contentment more than spending it on ourselves. Giving impacts the regions of the brain associated with pleasure and social connection.
- Health benefits – giving to others has been linked with decreased symptoms among people living with chronic illnesses. Giving can also help alleviate stress, which can boost our physical health and longevity.
- Feelings of cooperation and social connection – those of us who give are often rewarded for our generosity down the line – by those we’ve helped or others – creating positive interactions that promote feelings of trust, cooperation and good mental health.
- A sense of gratitude – giving a gift can stir up feelings of gratefulness that are at the core of our happiness, health and social bonds. The gratitude that comes from giving can simply help us feel better overall about our lives.
So the next time that nonprofit appeal pops up online or is delivered to your mailbox, remember the value of giving extends well beyond a line item on your tax return.
In what ways do you give back to your community? We’d love to know!
Pat Adanti-Joy, APR is a vice president at Franco. You can reach her at email@example.com.