Article Date:
February 2020


Word Count:
1952

 

 

Don’t Waste Donations on Your Church or Charity; Use Your Business


The Tax Cuts and Jobs Act (TCJA) makes it harder to benefit from your donations.

 

Let’s say you donate $10,000 to a church, school, or other 501(c)(3) charity:

 

1.

Will you get a tax deduction—in other words, will you itemize?

2.

Will you benefit from the entire $10,000 as an itemized deduction? In other words, did the $10,000 simply put you over the hump that beat the standard deduction?

3.

Say you can deduct all $10,000 as an itemized deduction. Would making it a business deduction increase the tax benefit value to you?

 

The TCJA made two big changes that make it less likely that you will itemize. First, the TCJA set a $10,000 limit on your state and local income and property tax deductions. Second, it increased the 2020 standard deductions (adjusted for inflation) to1

 

·

$12,400 for individuals, and

·

$24,800 for married couples filing jointly.

 

Even if you make a big donation, think about the problem this creates—suppose you are married and donate $17,000 to charity. If this is your only itemized deduction, your donation does you no good because it’s less than $24,800.

 

Fortunately, there’s a much more tax savvy way to give.

 

As a business owner, you can make a few modifications and convert your church, school, and other 501(c)(3) donations to a ... Log in to view full article.

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