Will you donate less to Charity?

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Broken Man 1999
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Re: Will you donate less to Charity?

Post by Broken Man 1999 » Sun Dec 24, 2017 9:42 am

We haven't been able to itemize for years now, so the tax cut won't change our giving at all.

As we get further into retirement, I intend to ramp it up some. The great unknown facing us next year is I will transition to retiree insurance. Both wife and I have had 100% free insurance (less my Medicare Part B) since 1999.

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highdesert
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Re: Will you donate less to Charity?

Post by highdesert » Sun Dec 24, 2017 10:05 am

libralibra wrote:
Sun Dec 24, 2017 2:14 am
The people in the middle are the only ones I can see being affected by this "human nature" element. However, what I'm saying is that they are being given the tax cut regardless of whether they donate or not (by taking the 24k deduction). They are not losing anything or getting less value by continuing to donate.
I hope that this becomes the prevailing interpretation (at least, outside of the very high SALT states): the high standard deduction gives you "credit" for doing something that you were going to do anyway. From that perspective there's no reason to reduce giving.

My giving will remain at the same level, but am not the best exemplar because I'll still be itemizing.

mouses
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Re: Will you donate less to Charity?

Post by mouses » Sun Dec 24, 2017 10:15 am

docnews wrote:
Sun Dec 24, 2017 8:19 am
I personally will still benefit from itemizing due to high income plus high percentage of charitable contributions but I believe they should have axed all of Schedule A. This new tax reform will make Schedule A "a tool of the top 10%" making it more of a political target in the future.
Axing Schedule A would have been terrible for people with high medical bills. In my Senior age group that is a lot of people, including people with spouses with very serious medical conditions, wheelchair bound, etc. It also includes families fighting diseases like cancer, whether insured or not. Really, I want to throw up when I see people having to have bake sales to try to pay medical bills.

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camillus
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Re: Will you donate less to Charity?

Post by camillus » Sun Dec 24, 2017 10:18 am

We give about 10% of gross. I prepaid most of next year’s giving just now.

We’ll give about the same going forward - and I am glad that I don’t have to keep track of things for tax time!

mirror
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Re: Will you donate less to Charity?

Post by mirror » Sun Dec 24, 2017 10:27 am

For various personal, practical, and financial reasons I donate time not money. Nothing will change.

Lynette
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Re: Will you donate less to Charity?

Post by Lynette » Sun Dec 24, 2017 10:29 am

I will give more as I can use QCDs as part of my RMD and this will lower my AGI. I would likely have give the same as previously if there had not been a change in the tax law. Having a lower MAGI, will lower my Medicare IRMAA payments. I would far rather give my money to charity than Medicare!

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Puck
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Re: Use RMD from Traditional IRA

Post by Puck » Sun Dec 24, 2017 10:30 am

fred9x wrote:
Sun Dec 24, 2017 9:11 am
If you are over 59 &1/2 you can have your IRA withdrawal go directly to a charity and those dollars won't be taxed. I don't have a DAF I just call Vanguard and give them the details. They send me the checks made out to the charity with my name on them.
What you're describing here sounds like a QCD, or Qualified Charitable Distribution. It's true that QCD dollars won't add to one's AGI, but the age floor is 70.5 not 59.5. It's often used to reduce RMDs, the monies one is forced to take at 70.5.

Any monies distributed from an IRA before age 70.5 is considered taxable, possibly subject to penalty if taken before one hits the 59.5 age.

I'm sure someone will correct me if I've misspoken.

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sunny_socal
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Re: Will you donate less to Charity?

Post by sunny_socal » Sun Dec 24, 2017 11:09 am

Don't plan on any changes, we give about $20k/year. I think we'll continue to itemize as well despite the larger standard deduction next year.

Never thought about a DAF before but I think I may look into it.

We have been under AMT recently, perhaps next year we'll drop out. Who knows.

SGM
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Re: Will you donate less to Charity?

Post by SGM » Sun Dec 24, 2017 11:48 am

A tax deduction for charitable donations allows me to give more than I otherwise would be able to do to qualified charities. We opened and funded a DAF late this year which will be used for charitable donations over the next decade.

There are a couple of charitable donations we make that are not deductible but worthwhile in my opinion.

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ClevrChico
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Re: Will you donate less to Charity?

Post by ClevrChico » Sun Dec 24, 2017 11:50 am

I can still itemize state, even while taking the standard federal deduction. For us, there continues to be a tax benefit. YMMV

afan
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Re: Will you donate less to Charity?

Post by afan » Sun Dec 24, 2017 1:16 pm

We base our total contributions on the after tax cost. If the after tax cost of charitable contributions goes up then our total will go down. If the after tax cost goes down then our contributions will go up.
So far, I don't know which of these will happen. It depends on the AMT, with it's 28% tax rate. Charitable deductions reduce taxes even for those who pay AMT. A dollar contribution then costs 72 cents after tax. But with no AMT, still itemizing, a dollar of contribution appears to reduce taxes by the regular tax rates. For someone who is currently paying AMT, will not be in AMT territory under the new tax law and will still itemize, the after tax cost may be lower in 2018 than in 2017. It could be as low 63 cents.

Still trying to figure out just where we stand on this.

For people who say their charitable giving will not change, are they saying that they do not budget based on after tax cost? If so, how do they budget? Or are they saying that they do budget based on after tax cost and have concluded that the after tax cost will be the same? For some people the after tax cost will be the same. For many it will change and it could go up or down.
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Leif
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Re: Will you donate less to Charity?

Post by Leif » Sun Dec 24, 2017 1:22 pm

I heard that charities may see a $13 billion/year decrease due to changes in the tax law. I plan to donate more, then in the past, through my newly opened DAF.

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Toons
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Re: Will you donate less to Charity?

Post by Toons » Sun Dec 24, 2017 1:24 pm

In some ways I consider the taxes I pay going to some form of "charity"
Fortunately I will be "contributing" more in "charity",
As my taxes are increasing.
:happy
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carolinaman
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Re: Will you donate less to Charity?

Post by carolinaman » Sun Dec 24, 2017 1:57 pm

I plan to continue giving the same. For the first time this year, I did QCDs, primarily because they give me some space to do Roth conversions without increasing my Medicare B premiums. In the future we will be doing QCDs and standard deduction.

mouses
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Re: Will you donate less to Charity?

Post by mouses » Sun Dec 24, 2017 1:58 pm

afan wrote:
Sun Dec 24, 2017 1:16 pm
For people who say their charitable giving will not change, are they saying that they do not budget based on after tax cost? If so, how do they budget? Or are they saying that they do budget based on after tax cost and have concluded that the after tax cost will be the same? For some people the after tax cost will be the same. For many it will change and it could go up or down.
I keep track of what I donate to each charity over the course of a year and try to donate a bit more each year to offset inflation. I have never monkeyed with the amounts due to any tax consequences. I give what I can afford based on my overall budget. The new tax bill will cost me about $1000 a year, but I intend to just eat that. Other expense increases are more significant, like big dental bills recently, and I try to cut down my spending to offset that, although it may take a few years to compensate.

jerryk68
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Re: Will you donate less to Charity?

Post by jerryk68 » Sun Dec 24, 2017 2:55 pm

When I took my first economics course I was fascinated when the rule of reciprocity was discussed. Basically, if someone gives you something you feel an obligation to repay. This rule operates not only with people you know, but also with strangers. If you get a gift for Christmas you usually feel obligated to give one in return. I keep a generic wrapped gift just in case I get a surprise gift. Hint, it’s under the tree without a tag.

Charities know that if they send you a nickel or a dime appended to an envelope you will feel obligated to reciprocate. Charities complain about the tax deduction being limited even though most people take the standard deduction but the charity still offers the illusion of a full deduction even though, in reality, you only receive in tax savings a small portion of what is donated. Same goes for the deduction for state & local taxes, tax preparation or even a deduction for safe deposit box. I personally donate because I want to give not because I get a tax deduction.

WL2034
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Re: Will you donate less to Charity?

Post by WL2034 » Sun Dec 24, 2017 3:13 pm

I would be interested to see the data on amounts given to charity by group of people:
group 1 - people who have taken standard deduction in the past and will continue to take standard deduction
group 2 - people who have itemized previously, but will now take standard deduction
group 3 - people who have itemized previously, and will continue to itemize

My guess is that group 2 will decrease charitable giving, so if that is a large proportion of overall giving to charities, then it makes sense the charities will see a significant decline. Especially for the group 2 people who live in high SALT, high property tax locales as they will have increased overall tax bills and also lose the charitable deduction.

libralibra
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Re: Will you donate less to Charity?

Post by libralibra » Sun Dec 24, 2017 3:33 pm

WL2034 wrote:
Sun Dec 24, 2017 3:13 pm
I would be interested to see the data on amounts given to charity by group of people:
group 1 - people who have taken standard deduction in the past and will continue to take standard deduction
group 2 - people who have itemized previously, but will now take standard deduction
group 3 - people who have itemized previously, and will continue to itemize

My guess is that group 2 will decrease charitable giving, so if that is a large proportion of overall giving to charities, then it makes sense the charities will see a significant decline. Especially for the group 2 people who live in high SALT, high property tax locales as they will have increased overall tax bills and also lose the charitable deduction.
Yeah, it would have been a good opportunity for the guy who had dinner with the "President of a well-known charity" to have asked her these kind of questions. It seems impossible that she wouldn't be aware of something so obvious (btw Group 1 is 70% of all filers), but the worry she expressed calls that into question.

I also wonder about the $13B decrease mentioned above. I can't imagine how an article came up with that number and it sounds like just another made up internet fact.

Afaict from the posts on this thread, it seems like (mostly) people will not change their behavior. Many of the posts seem to be in Group 2 as well. This group will probably just bifurcate into 2 types - the first will behave as Group 1 people do now and not really care about tax savings. The second, who need the extra incentive, will discover DAFs and be able to get the best of both worlds - i.e. the higher standard deduction and extra savings in off years, and full deduction of contributions in their "bunched" years.

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David Jay
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Re: Will you donate less to Charity?

Post by David Jay » Sun Dec 24, 2017 3:39 pm

Nope, I give a percentage of my gross income.
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El Greco
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Re: Will you donate less to Charity?

Post by El Greco » Sun Dec 24, 2017 4:05 pm

by libralibra » Sun Dec 24, 2017 3:33 pm

WL2034 wrote: ↑Sun Dec 24, 2017 3:13 pm
I would be interested to see the data on amounts given to charity by group of people:
group 1 - people who have taken standard deduction in the past and will continue to take standard deduction
group 2 - people who have itemized previously, but will now take standard deduction
group 3 - people who have itemized previously, and will continue to itemize

My guess is that group 2 will decrease charitable giving, so if that is a large proportion of overall giving to charities, then it makes sense the charities will see a significant decline. Especially for the group 2 people who live in high SALT, high property tax locales as they will have increased overall tax bills and also lose the charitable deduction.
Yeah, it would have been a good opportunity for the guy who had dinner with the "President of a well-known charity" to have asked her these kind of questions. It seems impossible that she wouldn't be aware of something so obvious (btw Group 1 is 70% of all filers), but the worry she expressed calls that into question.
Well, yeah, I'm THAT guy. And yes, she is keenly aware of who her donors are. Many who donate from the same state I live in, a high SALT state, who used to itemize but will now be taking the standard deduction. Of course, this is all academic and conjecture. Let's revive this thread in a couple of years and see who's right.

inbox788
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Re: Will you donate less to Charity?

Post by inbox788 » Sun Dec 24, 2017 4:35 pm

fposte wrote:
Sat Dec 23, 2017 11:38 pm
I will probably end up with a standard deduction. I therefore just opened a DAF and will probably add another charity to my pretax payroll donations next year.
I'm not sure, but it' looking like I'll be taking the standard deduction, so my charitable donations won't be deductible up to the standard deduction. If that's the case, I won't be donating in 2018.

I do have a DAF, which I made an extra donation for 2018 in November 2017, so I'll see if lumping donations and deductions in 2019 makes sense.

How do payroll deductions help the situation? Are the donations coming off the company accounts instead? It's quite possible the new tax changes disallow the pretax donations, so make sure you're understanding what's going on and it's not just that payroll hasn't had a chance to update their policies yet.

quantAndHold
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Re: Will you donate less to Charity?

Post by quantAndHold » Sun Dec 24, 2017 4:40 pm

Probably less. Not because of the inability to itemize, but because I'll have less money in my pocket.

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whodidntante
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Re: Will you donate less to Charity?

Post by whodidntante » Sun Dec 24, 2017 4:50 pm

Toons wrote:
Sun Dec 24, 2017 1:24 pm
In some ways I consider the taxes I pay going to some form of "charity"
Fortunately I will be "contributing" more in "charity",
As my taxes are increasing.
:happy
I think it was Mark Cuban who said something to effect of "if you want to contribute to society, make a lot of money and pay taxes."

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Artsdoctor
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Re: Will you donate less to Charity?

Post by Artsdoctor » Sun Dec 24, 2017 5:00 pm

livesoft wrote:
Sat Dec 23, 2017 10:26 pm
First, we have had a DAF for many years and donate to charity both from the DAF and with cash throughout the year. Our DAF is funded from deductible share gifts to avoid capital gains taxes, too.

However, the tax law change will mean that our usual level of giving will not be deductible anymore and that creates a behavioral tinge for me (but probably not my spouse). Sure, we will be able to avoid long-term capital gains by continual donations, but the added kicker of reducing taxable income will no longer be there.

So one way out is to up our game and increase our donations while still bunching major gifting into every other year.

It seems many of you are trying to get DAFs and contributions going here at the end of 2017, but does that mean less giving to charities over the next few years? Have you thought about that?
We have been "front loading" our DAFs for the past two years and this year will be nearly 20% of our AGI. For us, it has been a way of rebalancing since the equity markets have been on such a tear. Going forward, we will probably only itemize every other year since we have nearly no mortgage interest and the only deduction will be charitable contributions (plus the $10,000 SALT). Of course, I don't know if we'll be able to amass enough medical expenses to itemize (I hope not).

We don't anticipate giving less in the years ahead but it will almost all be done through our DAFs.

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TierArtz
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Re: Will you donate less to Charity?

Post by TierArtz » Sun Dec 24, 2017 5:30 pm

No; we'll still give 10% of net dollar blessings to our church or a parachurch ministry. We'll also donate frequently to our kids' teacher's classroom needs.

fposte
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Re: Will you donate less to Charity?

Post by fposte » Sun Dec 24, 2017 5:39 pm

inbox788 wrote:
Sun Dec 24, 2017 4:35 pm
fposte wrote:
Sat Dec 23, 2017 11:38 pm
I will probably end up with a standard deduction. I therefore just opened a DAF and will probably add another charity to my pretax payroll donations next year.
How do payroll deductions help the situation? Are the donations coming off the company accounts instead? It's quite possible the new tax changes disallow the pretax donations, so make sure you're understanding what's going on and it's not just that payroll hasn't had a chance to update their policies yet.
Well, heck. Thanks for the pointer--these actually are post-tax. I had thought there was some special state magic and they were pre-tax, but apparently not.

afan
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Re: Will you donate less to Charity?

Post by afan » Sun Dec 24, 2017 5:59 pm

People who used to itemize and no longer can would logically cut their contributions to the same after tax cost, but not to zero. Their contributions cost them something before and still will cost then something, just a bit more.

I would take the concerns of the nonprofit sector seriously since the it studies what motivates donors. I am sure they can calculate quite accurately how changes in the economy and tax law affect donations.
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flyingaway
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Re: Will you donate less to Charity?

Post by flyingaway » Sun Dec 24, 2017 6:05 pm

No. I don't do formal donation. I gave money to needy people and never took tax deduction.

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1210sda
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Re: Use RMD from Traditional IRA

Post by 1210sda » Sun Dec 24, 2017 7:21 pm

Puck wrote:
Sun Dec 24, 2017 10:30 am
fred9x wrote:
Sun Dec 24, 2017 9:11 am
If you are over 59 &1/2 you can have your IRA withdrawal go directly to a charity and those dollars won't be taxed. I don't have a DAF I just call Vanguard and give them the details. They send me the checks made out to the charity with my name on them.
What you're describing here sounds like a QCD, or Qualified Charitable Distribution. It's true that QCD dollars won't add to one's AGI, but the age floor is 70.5 not 59.5. It's often used to reduce RMDs, the monies one is forced to take at 70.5.

Any monies distributed from an IRA before age 70.5 is considered taxable, possibly subject to penalty if taken before one hits the 59.5 age.

I'm sure someone will correct me if I've misspoken.
And, unlike an RMD which can be taken "in the year in which you turn 70 1/2", you actually have to be age 70 1/2 before you can make a Qualified Charitable Distribution (QCD). (as I understand it.)
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nolesrule
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Re: Will you donate less to Charity?

Post by nolesrule » Sun Dec 24, 2017 7:39 pm

Yes, we will be decreasing our charitable donations going forward by about 1/3 (excluding synagogue dues in the number).

We're in that group of people in a high SALT state going from itemizing (in AMT at 32.5% where charitable donations made a significant impact on our taxes) to having to take the standard deduction. SALT and mortgage interest would have been enough to exceed the new standard deduction if there was no SALT cap.

We did effectively bunch some of what we would have given in 2018 into 2017.

jtravisdavid
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Re: Will you donate less to Charity?

Post by jtravisdavid » Sun Dec 24, 2017 8:22 pm

I project substantial income tax savings with the new tax law and subsequently increased the amounts of several monthly recurring donations I have set up.

Pigeye Brewster
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Re: Will you donate less to Charity?

Post by Pigeye Brewster » Sun Dec 24, 2017 8:26 pm

Not less overall, just the timing. Started a DAF this year to use appreciated shares, and I've since added additional to front load a couple of years worth. Will use the standard deduction then replenish the DAF.

mffl
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Re: Will you donate less to Charity?

Post by mffl » Sun Dec 24, 2017 9:32 pm

I won't change mine, though I can see where it would affect others. This isn't even a question of the true meaning of charity or anything, the donor could commit to the same pre-tax donation level, and for some that will result in a higher net donation, and for others it will be lower.

However, I'd expect that people giving high dollar amounts in absolute terms will be plenty knowledgeable enough to learn about DAFs and bunching, either that or they're not hurting enough for money for a few tax changes to really affect the net result.

That said, if you subsidize something (charitable donations), you'll get more of it, and vice versa. A common theme of the tax bill and the frameworks it emanated from was simplification, and an attempt to reduce distortion caused by tax preferences. A couple posters mentioned that charitable donations ought to be above the line deductions, which I personally think is a great idea, but is obviously counter the general trend of simplification that the tax bill represents. That said, even if you favor simplification (which I'd generally be in favor of), then you've left a loophole open the size of a Mack truck in the form of the DAF. Might as well have either closed the loophole or just put it on page 1 of the 1040.

DAFs have been increasing in popularity over the last few years, and I imagine they'll explode next year. There has been much discussion of that around here the past couple days. That, plus the 70% of people who took the standard deduction anyway (many of whom regardless are irrationally or ignorantly influenced by suggestions that they can deduct various donations from their taxes, and some of the new standard deduction takers will do the same thing), plus people not motivated by the tax savings for whatever reason (swimming in money, and/or just committed to their particular charities).

That said, it's certainly a complex combination of factors, so all we can do is speculate. We shall see, I suppose.

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Re: Will you donate less to Charity?

Post by grabiner » Sun Dec 24, 2017 10:04 pm

NYC_Guy wrote:
Sat Dec 23, 2017 11:00 pm
With the repeal of the Pease limitation, my charitable donations just got more valuable. And they are more valuable to me next year. So my 2017 annual charity checks are going out in 2018 (instead of next week).
Pease never affected charity anyway; charitable distributions, interest expenses, and casualty losses are not reduced by Pease. See the Schedule A instructions.

And for most taxpayers, Pease was really just an increase in the tax rate. The Pease limitation reduces your itemized deductions by 3% of the income over the limit. But since you live in NYC, your state and city income taxes are far more than 3% of the income over the limit. Thus, if you get an extra $1000 of Pease-covered deductions, your taxable income will decrease by $1000.

If you can deduct your charitable contributions in full from your NY taxes, you might have a slightly higher marginal benefit in 2018 because the NY taxes are no longer deductible from federal taxes (you are well over the SALT limit). However, if your NY income is high enough, NY itemized deductions phase out.
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Re: Will you donate less to Charity?

Post by finite_difference » Sun Dec 24, 2017 11:42 pm

No. I am working my way up to 1% of gross, and will continue, tax breaks or not. Should get there in a year or two. And if I can ever max retirement accounts, then I will want to increase it above that, try for 2%, 3%, etc. Mainly now I’m focused on giving to the best charities I can with the money I have.
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Re: Will you donate less to Charity?

Post by White Coat Investor » Mon Dec 25, 2017 1:34 am

Toons wrote:
Sun Dec 24, 2017 1:24 pm
In some ways I consider the taxes I pay going to some form of "charity"
Fortunately I will be "contributing" more in "charity",
As my taxes are increasing.
:happy
Mandatory charity sounds like the "mandatory fun" we did when I was in the military.
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Re: Will you donate less to Charity?

Post by Biglaw Investor » Mon Dec 25, 2017 7:23 am

Yes, we will donate less to charity. I live in NYC with no car and often have to pay people to haul charitable donations to charities. I can justify this since the tax break is well worth it. Now, I suspect we'll end up throwing more old things away or simply putting them outside for someone to pick up for free. I guess this is still a form of charitable giving but it won't be going to the formal institutions or organizations.

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Re: Will you donate less to Charity?

Post by midareff » Mon Dec 25, 2017 8:24 am

We have been donating between 3.5% and 4% of AGI to highly rated charitable organizations that primarily work with children's diseases and disabilities both domestic and foreign, and a bit to our hurt warriors. Fortunately, the markets have been good to us and we can do this to help others less fortunate or able. I will not make any changes based on charges to the tax laws.

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Re: Will you donate less to Charity?

Post by CyclingDuo » Mon Dec 25, 2017 8:36 am

We will continue donating to charity as we always have (usually about 5-6.5% of our AGI). We wish we could give more!
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Re: Will you donate less to Charity?

Post by cheesepep » Mon Dec 25, 2017 8:39 am

I don’t believe in charities, so I will donate the same this year — a value of $0. I occasionally donate to cancer research but not this year. The Mayo Clinic constantly spans me with snail mail asking for even more donations and “progress updates.”

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Re: Will you donate less to Charity?

Post by Grt2bOutdoors » Mon Dec 25, 2017 8:45 am

I don’t let tax law dictate what we do give. There are plenty of folks who need a helping hand.
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Re: Will you donate less to Charity?

Post by friar1610 » Mon Dec 25, 2017 8:59 am

No, I will not donate less to charity.

For the past 10 years or so I made my largest annual charitable deduction via the transfer of appreciated MF or ETF shares directly to the charity. Earlier this yeat I decided to try using a QCD since I am now taking RMDs that I don't really need for living expenses. It seemed to be pretty easy so I used that method for a few more contributions this year. With the new tax law, I checked with the charity that gets the big annual contribution to see if they would credit me for the next 2 years' contribution if I made a large ETF transfer before the end of the year. They said yes so the transfer is in-process with Vanguard. (I hope they don't screw it up as I've read about but never experienced sloppy admin at VG.) I'll get the 2017 deduction and as far as the charity's bookkeeping is concerned I've already made my CY 2018 and 2019 contributions. So I expect that 2017 will be my last year of itemizing and then I'll use QCDs going forward.

Something about DAFs just doesn't appeal to me.

Merry Christmas!
Friar1610

KarenC
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Re: Will you donate less to Charity?

Post by KarenC » Mon Dec 25, 2017 9:52 am

El Greco wrote:
Sun Dec 24, 2017 1:15 am
by libralibra » Sun Dec 24, 2017 12:53 am

By that argument, raising tax rates should increase charitable giving, right? But then people would just say they have less money so will give less! Both these arguments cannot be true.
You're talking idealism. We're talking human nature. I'll wager any amount of money that human nature trumps idealism when the subject is reality. I am quite confident that by effectively eliminating charitable deductions for millions of taxpayers, there will be significantly less contributions made. As a matter of fact my wife and I just had dinner with the President of a well-known charity last night. She expressed great concern that donations would be severely curtailed in the future due to the new rules.
It may not be as simple as that; from a WSJ article:
When it comes to charitable giving, it’s well known that taxes matter. The promise of a big deduction is a great way to get people to open their checkbooks.

Yet the relationship between taxes and giving isn’t as simple as it looks.

Researchers have been studying the issue for years, some by sifting through masses of tax-return data, others by handing people money and seeing how their donation decisions change when they are “taxed” in various ways. The results show that the money and taxes relationship is a lot more nuanced than the idea that a bigger deduction means a bigger donation—with significant implications for both charities and policy makers.
https://www.wsj.com/articles/the-surpri ... 1450062191
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Tycoon
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Re: Will you donate less to Charity?

Post by Tycoon » Mon Dec 25, 2017 10:02 am

In my opinion, one should be giving to help the less fortunate, not for the tax break.
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Re: Will you donate less to Charity?

Post by Artsdoctor » Mon Dec 25, 2017 10:37 am

Money is fungible and one would try to avoid the mental accounting trap you can fall into when making some of these decisions, such as charitable giving. If you have a pie and you donate a portion of that pie to charity each year, wouldn't you assess the size of the pie next year and then decide what that portion will be? It seems some people are punishing charities for the new tax law; if you find yourself in this situation, sit back and enjoy the holidays, calm down, and then come back to the table when you're in a better mood. It's possible that you may have more money in your pocket with the new tax law and can donate the same, or more, despite not being able to itemize.

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Re: Will you donate less to Charity?

Post by flamesabers » Mon Dec 25, 2017 10:41 am

No, I won't be donating less to charity. Since I've always taken the standard deduction, this particular change in the tax law has no impact on me. If anything, I might be giving more to charity next year depending on the size of my reduction in tax liability.

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Re: Will you donate less to Charity?

Post by Chip » Mon Dec 25, 2017 10:52 am

I think I will be donating more.

I'm sticking quite a bit into the DAF this year. There will be this big pot of money sitting there that's not mine anymore. I think it will be like what happens when you buy the 64 oz mega-size shampoo at Costco -- you end up using more each time you wash your hair. So I think good causes that I didn't consider before might get some attention now.

It isn't logical but I think it's probable.

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Re: Will you donate less to Charity?

Post by bengal22 » Mon Dec 25, 2017 10:58 am

Artsdoctor wrote:
Mon Dec 25, 2017 10:37 am
Money is fungible and one would try to avoid the mental accounting trap you can fall into when making some of these decisions, such as charitable giving. If you have a pie and you donate a portion of that pie to charity each year, wouldn't you assess the size of the pie next year and then decide what that portion will be? It seems some people are punishing charities for the new tax law; if you find yourself in this situation, sit back and enjoy the holidays, calm down, and then come back to the table when you're in a better mood. It's possible that you may have more money in your pocket with the new tax law and can donate the same, or more, despite not being able to itemize.
You are exactly right. OK you cannot itemize because the standard deduction is so much higher. But you have the same gross income but you are not paying as much federal tax. That seems like perhaps you could give more not less. Perhaps the fact that one cannot itemize may just be an excuse not to give.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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Re: Will you donate less to Charity?

Post by nolesrule » Mon Dec 25, 2017 11:15 am

bengal22 wrote:
Mon Dec 25, 2017 10:58 am
Artsdoctor wrote:
Mon Dec 25, 2017 10:37 am
Money is fungible and one would try to avoid the mental accounting trap you can fall into when making some of these decisions, such as charitable giving. If you have a pie and you donate a portion of that pie to charity each year, wouldn't you assess the size of the pie next year and then decide what that portion will be? It seems some people are punishing charities for the new tax law; if you find yourself in this situation, sit back and enjoy the holidays, calm down, and then come back to the table when you're in a better mood. It's possible that you may have more money in your pocket with the new tax law and can donate the same, or more, despite not being able to itemize.
You are exactly right. OK you cannot itemize because the standard deduction is so much higher. But you have the same gross income but you are not paying as much federal tax. That seems like perhaps you could give more not less. Perhaps the fact that one cannot itemize may just be an excuse not to give.
Nah, we're just tax adjusting, just like we do with every other invest/save/spend analysis.

When you can itemize, charitable donations are the only area where you can quite literally do more by doing more, because all other components of itemization are essentially fixed bills. Even if we could itemize still, we wouldn't be able to have our donations go as far, because we'd be dropping from the 32.5% (AMT) to 24%.

Simple example. 25% tax bracket (for ease of math). $2000 donation. You reduce your taxes by $500, which you can then donate. Which reduces your taxes by $125, which you then donate. Which reduces your taxes by $31.25. $7.82, $1.95, $0.49.... So that $2000 is really $2542.

Kinda reminds me of the Roth vs. traditional analysis.

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Re: Will you donate less to Charity?

Post by 1210sda » Mon Dec 25, 2017 11:50 am

I will probably give more to charity.

I used to itemize and deduct my contribution. But this year, and even later years with the new Tax act, I'm taking the standard deduction and giving to charity with QCD's.

The QCD's come out of my IRA and not what I consider "current year spending", as was true when I itemized and wrote a check to the charity. As such, it doesn't "feel as bad". So I will probably give more so that I can reduce the current year income tax.

It's sort of like buying stuff with a credit card vs paying cash. The credit card purchase and the QCD are easier to do.

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