I do tax preparation on the side and my clients are average joes. The majority of my clients are in a similar situation.
This, if true, is surely good news. And I’m encouraged, as well, by the opinion of the overwhelming “consensus”. Reminds me of the equally valid “consensus” regarding anthropogenic global warming.
I really am dubious regarding the many tax fraud schemes, reports of which today are rampant. Suspect it’s mostly clickbait. They claim the scammers file early, applying for a refund in the name of the person being scammed. But who knows.
Now I never in my life have filed a tax return other than on paper. And my returns, going back many, many years, all have a similar and consistent presentation style, containing certain attachments of my own creation. Hence, any return filed electronically in my name by a scammer will stand out like the proverbial sore thumb.
It’s quite a comfort, really, not being part of the “consensus”. 
Been that way for as long as I can remember. And it has been a winning strategy.
I exceeded the standard deduction by $150. As expected, I’m right in the “worst possible results group” for the tax “cut”. (Of course, not including the $$$ SALT limit people). I should have staggered property taxes to this year, fark me not doing that cost me $1k+. I did stagger charitable to this year (from last year).
I wonder how large a hit to charitable groups there will be next year as middle class realizes they (in general) don’t get to deduct charitable contributions.
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I think charities will be fairly hard hit, especially local ones that depend on local support only and have no large outside benefactors. Also places like goodwill and savers, when people realize that receipt they get for donating is going to do them no good…
Sure, but I think he doesn’t have an excuse for his positions other than the filer’s naïveté, which is what he’s trying to demonstrate by filing by hand on paper (see the quote below). I only suspect that “sorry, I’m old and stupid” is not an excuse for the IRS.
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Do that many people actually donate to goodwill who could actually claim the deduction and did so?
I live in a low cost flyover state and was never able to get close to beating the standard deduction so I never had to worry about my donations to goodwill. I always just saw it as getting rid of stuff that might help others and potentially keep items out of the landfill.
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I think cash/liquid donations would be more impacted, as you point out. Is goodwill like food drives, where the vast majority of actual physical items have near $0 practical charitable value? (Except providing low cost used item availability and jobs to staff the stores)
I would guess that most homeowners with mortgages and >median income would previously exceed the standard deduction. Especially if they bothered to stagger property tax if allowed in their area.
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22 million people claimed non-cash donations in 2016 (most recent year with figures). thats about 14.7% of all filers.
https://www.irs.gov/pub/irs-soi/16in21id.xls
Thats nearly 1/2 the 45M who itemized.
The now current tax law is expected to cut the # of people who itemize down to 18M. Most of the people who will still itemize are higher income and also donate items at a higher %.
We could probably see the # of people who get tax cut from donating goods cut in half.
That doesn’t of course mean that charities will lose half their donations. There are a lot of people who donate and don’t claim a tax cut and the higher income people who don’t lose the tax benefit also donate more stuff (85% of the value is from people with AGI >$100k)
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I’ll still donate, I guess. A lot of time it’s easier than trying to sell small stuff on CL.
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Same here. I didn’t itemize this year so all of my goodwill receipts are just sitting. I will still drop off stuff. I mainly do it to get rid of stuff too.
Personally, I will probably itemize every other year by funding a DAF.
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Been a while since I looked into, lowest cost I found was $100/yr. That sound about right?
Im still at lower levels but up ~25% a year and to 4 digit now.
Ive just started to stock transfer directly to UW. Can also shift that between years. Seems easier than a DAF, although I’m limited to who I can designate the funds for (and the designations really don’t matter much). For me, UW’s promotional spending cut (7% locally?) is low enough that it makes sense for the convenience and also not having to pay for or deal with a DAF.
Quite frankly I think a lot of folks are claiming under the $500 threshold for Form 8283. If they get audited and the IRS dickers over the value of the used coat they will just eat the $100-$200 in back taxes and interest. Now they won’t be able to claim that, either, with the standard deduction which is just as well. I can see the charitable tax deduction move in the future to a charitable tax credit of, say, 25%. This would stimulate middle class and mass affluent giving while not being such a giveaway for the rich.
What does your nonsensical denial of science have anything to do with taxes??
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I may be misunderstanding what you are saying here, but gifting appreciated assets and using a DAF are not mutually exclusive. You simply gift the appreciated assets to your DAF which itself a 501c(3) charity.
I funded my DAF in late 2017 with appreciated assets. The DAF simplified charitable giving as long as your grantee is a charity someone has given to previously (if not, it may take a few days). Making a grant is as simple as clicking a box and typing in the amount. You are right about the fee, except that I’ve still not seen any transaction for a fee in my account. Maybe it’s hidden in the expenses of the investments I have my DAF money in.
Yeah. The average amount of stuff donated is around $1000 for the large majority of the people filing. SO over half of filers give less than $500 of stuff.
No but it was helping some people get over the hassle of donating. With no deduction, consider the choice: (1) store your donation stuff until you have enough to make it worth the trip, load your car with donation items, drive to a goodwill dropoff location, unload your car, drive back home, and pay for the gas used to do all this but feel like you’ve done the right thing and your gently used stuff will provide for others less fortunate; or (2) toss your donation stuff in the trash and take it to the curb on trash pickup day; (3) try to sell some of the more valuable on CL and get something out of all your used stuff.
Financially, selling on CL may be better but possibly not worth the hassle. Clearly donating is better for the environment and for the less fortunate, but it has to overcome the hassle and inertia to do so… that’s not a great setup for maximizing donations.
The analysis is obviously way worse for cash donation, or donations of big ticket items like cars. In the past, you could get about the same or maybe even more by donating your car to a charity. Without the deduction, what’s the incentive to not call a junkyard place that picks up your old beater and will give you a modest amount of cash for it vs. the church who will give you an effectively worthless donation receipt?
For cash, the analysis is different but close. In the past there was that feeling of efficiency. You’d give money with a built-in 25% bonus due to the deduction. You had the feeling that even with some charity overhead, that was an efficient way to do things. Also for many, they’d factor in that deduction in their % of income cash donation. Now they’re simply giving the same after-tax dollars which is 20% less. And this is not theoretical. Our church finances have already been impacted despite the economy doing relatively well and wages actually creeping up appreciably.
As far as I’ve read, the only donations not impacted are corporate/big institution because they were not affected by it and actually benefited from large tax cuts themselves. But for local/community charities, the impact is tangible and I’m afraid will only amplify know that people have filed their 2018 and more are aware of the loss of charitable deductions.
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Agreed. I was just saying that for me it is logistically simpler.
It can actually be much larger. Each $150 cost me ~$100 after-tax with appreciated assets (AAPL shares with only couple years holding period.) That was at only 24% marginal rates.
1/3 lost for the charity if I wasn’t deducting even if I donated the same amount (ignoring the motivation decrease you pointed out).
Since sales tax std deduction + mortgage + property tax put me $150 over std deduction, my charitable donations will still be deductible for a while. Especially if I stagger property tax.
Yes for Fidelity. I am unsure of the others’ fees.
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Gremln007 … I know that there is supposed to be an administrative fee at Fidelity, but I have yet to see any transaction labelled as such. Looking at your 2018 year-end statement, do you see where it is called out? I do not.
It may be hidden within the investment costs and never appear explicitly as a transaction, but that would be a little weird.
I’m certainly not going to call Fidelity to complain that they aren’t charging me, though.