2018 Charitable Contributions

[audreyh1]

Same here, so I just skipped that part.

Yeah - I skipped that part of the poll too.

 

[Scuba]

We itemized before, and expect to itemize for 2018. We didn’t change our contributions much, although who got what did shift. We expect to pay about $6K more than under the old law due to the SALT limitation.

 

[lucky penny]

Charitable contributions in 2018 were about the same, but I just don't know whether I'll itemize or not. Since I'm losing the large SALT deduction, maybe not. But other changes in the tax law might affect me in ways I haven't figured out yet. I won't know until I see the bottom line.

 

[pb4uski]

Results as of tonight:

Previously itemized but will take standard deduction in 2018		32	50.8%
Previously itemized and will continue to do so		17	27.0%
Previously used standard deduction and will continue to do so		14	22.2%
Previously used standard deduction but will itemize in 2018		0	0.0%
Total		63	100.0%

Contributions in 2018 will be higher than in prior years		11	19.3%
Contributions in 2018 will be about the same as prior years		28	49.1%
Contributions in 2018 will be lower than in prior years		13	22.8%
I don't do contributions.		5	8.8%
Total		57	100.0%

Participants who missed it was a two-question poll: 6

So it looks like the new tax law has caused about 1/2 of those who previously itemized to now take the standard deduction, with the remainder continuing to deduct as they have in the past. And about 1/2 will not change their level of contributions, with those increasing or decreasing contributions in 2018 being close to the same.

 

[Winemaker]

I will take the standard deduction this year, however, all my charitable contributions that I normally would have given in 2018, will be made in Jan 2019. I will also make my 2019 contributions in 2019, as well as prepay 6 months of my 2020 health insurance premiums in December 2019. I believe this will help DW and I, taxwise.

We normally have $24,000 in deductions. So bumping $12,000 in HC premiums, and $10,000 in charitables, should bump 2019 deductions by $11,000 to $35,000.

I hope I understand the new law, we will have the same outflow regardless.

 

[DrRoy]

Starting a couple years ago, we no longer had enough deductions to itemize.

 

[Cobra9777]

Somewhat difficult to answer the first part because, previously, we bunched deductions every other year and itemized. For the in-between years, we took the standard deduction. Because our annual property tax is about equal to the prior standard deduction amount, this essentially enabled us to take 3 standard deductions every 2 years, plus we bunched charitable.

2017 was a bunching year. We paid our 2016 property tax in January of 2017, and paid our 2017 property tax in December of 2017. We also made LOTS of charitable contributions, knowing that it may be our last year to itemize. In December of 2017, we pulled in some contributions, that would have ordinarily been made in 2018, to maximize the 2017 tax benefit. So yes, 2018 contributions will be lower than normal, but should normalize in 2019.

We have no mortgage interest and we've never deducted medical. Going forward, bunching (for us) makes no sense due to the $10K SALT limitation. We will almost certainly take the standard deduction every year unless something really unusual happens or we significantly increase our charitable contributions. We'll do that when we're older, after SORR is safely in the rear view mirror.

 

[pb4uski]

.... as well as prepay 6 months of my 2020 health insurance premiums in December 2019. I believe this will help DW and I, taxwise. ...

I'm skeptical that the prepaid health insurance premiums are deductible. You may recall a year ago people were in a twitter about prepaying 2018 real estate taxes to bunch deductions in 2017, but the IRS came out with a bulletin saying that in order to be properly deductible that the real estate taxes had to have been assessed as well as paid, and in many cases the tax year for property tax purposes was a calendary year so prepaid property taxes would not be deductible.

Same principal... the premium for January would be deductible if paid in December because it has been assessed... but premiums for February and onwards would not have been assessed/billed so they wouldn't be deductible.

 

[Winemaker]

We receive our 12 month coupon book for health care premiums in June, just like a car payment book. We have in the past, paid all 12 months at once, and took the annual deduction. So I dunno...

 

[Dash man]

We’ve itemized as long as I can remember and will continue to for this year. We’ve maxed out the property taxes and have spent north of $30k in health insurance premiums and other healthcare expenses. We’ve increased our charitable giving this year, but are unsure about giving for next year at this time. We will probably itemize until we’re on Medicare in three years.

 

[pb4uski]

We receive our 12 month coupon book for health care premiums in June, just like a car payment book. We have in the past, paid all 12 months at once, and took the annual deduction. So I dunno...

Actually I found something specific to health insurance premiums... it looks like if your policy term extends into 2019 that any prepaid health insurance premiums would be deductible. So for example, if your policy is July 1, 2018 to June 30, 2019 and you pay the monthly premiums for Jan-Jun 2019 in December 2018, then it would be deductible.

But if you also prepaid for Jul-Dec 2019 in December 2018 then that might be questionable beause you don't have a policy for that period.

https://www.bnncpa.com/resources/library/accelerating_your_deduction_for_prepaid_expenses

 

[RunningBum]

Participants who missed it was a two-question poll: 6

At least 2 of us out of those 6 knew it was a 2 question poll but didn't know how to answer for a DAF, so we intentionally skipped it.

 

[pb4uski]

ok, fair point

 

[Montecfo]

We receive our 12 month coupon book for health care premiums in June, just like a car payment book. We have in the past, paid all 12 months at once, and took the annual deduction. So I dunno...

Seems worth a shot. In the property tax dustup, deductibility turned on whether the tax had been assessed or not. You could not deduct what in essence was an estimate of future tax due.

Seems you may have that part beaten.

 

[scrabbler1]

Somewhat difficult to answer the first part because, previously, we bunched deductions every other year and itemized. For the in-between years, we took the standard deduction. Because our annual property tax is about equal to the prior standard deduction amount, this essentially enabled us to take 3 standard deductions every 2 years, plus we bunched charitable.

2017 was a bunching year. We paid our 2016 property tax in January of 2017, and paid our 2017 property tax in December of 2017. We also made LOTS of charitable contributions, knowing that it may be our last year to itemize. In December of 2017, we pulled in some contributions, that would have ordinarily been made in 2018, to maximize the 2017 tax benefit. So yes, 2018 contributions will be lower than normal, but should normalize in 2019.

Bunching of deductions can be a tricky prospect, as you pointed out. Sometimes, you get a little luck to help the cause. Back in 2014, the last year before my health issues (which enabled me to itemize every year through 2017), a few things came together which saved me some taxes due to bunching. First, because of a minor snafu while enrolling for the initial ACA exchanges, I didn't make my first premium payment until January. I later paid my Jan 2015 payment in December of 2014, giving me 13 monthly payments in 2014. Next, I bunched my estimated state income tax payments so that the 4th quarter of 2013's payment was made in Jan 2014, while my 4th quarter of 2014's payment I made in December of 2014. Because I make my only estimated state income tax payment in the 4th quarter, this gave me two years of state income taxes within the same calendar year.

I did learn later that the way the ACA subsidy calculation interacts with other parts of the tax code costs me a few dollars in the years I don't itemize, so I need to be able to save extra money from bunching to offset this giveback. But once my medical issues arose in 2015, I have always been itemizing every year, until 2018, when I will take the SD unless I have a big spike in medical expenses (knock on wood that doesn't happen!).

 

[Montecfo]

I did not do the poll but we still itemize. We did do a DAF in anticipation of lower taxable income next year. Expect we will not be itemizing in our ACA subsidy years.

 

[jollystomper]

Still itemizing for 2018 as mortgage interest + capped state/local taxes + charity will exceed the standard deduction. in 2019 we will see, but as there are some charities we really care about, whether or not we can deduct our contributions will not be a factor in supporting them.

 

[Crewer]

Like many others, we will take standard deduction in 2018 for the first time in years. But we plan to itemize in 2019 (and set up a DAF) so I am postponing some charitable contributions from Dec. to Jan. to take advantage of that. I said lower contributions for 2018 in the poll but the effect is really no change - just a 1 or 2 week postponement.

 

[Trooper]

Making the transition from itemizing to taking the standard deduction in 2018. We plan to contribute the same, but I can see where the new tax law would cause many to contribute less.

I also wonder what impact the new tax will do to the housing market, as there's now less incentive to take on more mortgage interest and property taxes.

 

[RE2Boys]

For the first time in over 20 years, I itemized in 2017 in anticipation of the change in the standard deduction. Established a DAF with about five years of my charitable contributions so I could take advantage of the much lower standard deduction for 2017. Do not intend to itemize for the next five years while I use the DAF for charitable giving.