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Charitable Bequests Under The New Tax Act

Charitable Bequests Under The New Tax Act

Summary: Under the new Tax Cuts and Jobs Act, the standard tax deduction has increased for individuals and married couples filing jointly. With fewer people likely to itemize their charitable donations, charitable organizations could take a major fundraising hit. To counteract this and keep organizations afloat, people may want to consider making charitable bequests in their estate planning.

The Tax Cuts and Jobs Act, a sweeping overhaul of the U.S. tax code, took effect at the beginning of 2018. The Act can potentially impact the manner in which individuals and families donate funds to their favorite charitable organizations.

The Tax Cuts and Jobs Act did not eliminate charitable giving bequests (as it did with other tax exemptions), but it did change the rules of this tax and estate planning tool. Under the new guidelines, the standard tax deduction has increased from $6,350 to $12,000 for individuals, and from $12,700 to $24,000 for married couples filing jointly. Also, an individual donor may now deduct cash contributions to charities and donor-advised funds up to 60% of their adjusted gross income, which is up from 50% in previous years.

With the standard tax deduction now doubled, many people might not want to spend the extra time itemizing all of their expenses and donations. For example, a married couple who is already claiming the maximum $10,000 in state and local taxes would have to make more than $14,000 in itemized charitable gifts per year to receive any tax benefit over the 2018 standard deduction. Keeping in mind that individuals can only deduct the charitable donations on their taxes if they itemize, that could mean that fewer people overall are supporting charitable causes.

But there is another way for people to make charitable donations, and that is through their estate planning. The estate tax encourages charitable giving by allowing deductions for charitable bequests (donations gifted upon an individual’s death by their estate). That means that an individual can designate in a will or trust that a certain amount of money or property is donated to a charity at their death.

For those who want to continue supporting their favorite causes and organizations, it is important – now more than ever – to continue making donations. Under the new Tax Cuts and Jobs Act, with fewer people incentivized by the tax benefits of charitable donations, it is likely that charitable organizations are going to take a major fundraising hit. If you want these organizations to continue operating, and to continue helping others in need, you may want to consider making a charitable bequest in your estate planning. If you have questions about the new tax bill and charitable planning, you can contact Siedentopf Law via our website at or by calling (404) 736 – 6066.

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