There Are Concerns That Tax Reform May Change The Way Families Approach “Spring Cleaning” And Giving

Springtime marks a point each year when people tend to pause and reflect on how much they should keep in all that’s accumulated in their households. But it might actually be better regarded as the start of a process for thoughtfully dealing with such stuff. The improved weather is undoubtedly a factor.

Another factor could be the prospect of moving everything into a new house now that the old has closed. Those who are downsizing have little choice, unless they opt for contract storage space. Surely it must be something more than a growing awareness of National Thrift Shop Day. [1,2,3,4,5,6]

On a routine basis, it’s common to think of Goodwill Stores, Nu2U, and Salvation Army for donations in the City of Saline. All accept a selection of clothing, furniture, and certain electronics items in good, sellable condition. Anecdotally, receiving dock workers from all three have reported that current quality, variety, and volume “seem” on par with 2017. [7,8,9,10]

But this is still very much a time of transition in the tax code. [11]

With all but those who’ve filed for extensions now having completed their personal income tax returns by the latest April deadline, Saline Journal put the question of physical donations to Gabriel Sandler, Enrolled Agent with Capstone Tax & Financial. [12,13]

“A lot of people asked, ‘Do I still need to save receipts?'” he began. Charitable donations “are still deductable. People ask if that hasn’t been removed, and the answer is no, that’s not really the case. Changes to Schedule A make is less likely people will be itemizing.” [14]

Just last week, USA Today reported that a “total of 36.95 million tax returns claimed charitable contributions made during the 2016 tax year,” under the previous code. “The average charitable deduction among those nearly 37 million tax returns was $5,508. This was up slightly over the $5,491 average deductiion from the previous year.” Other sources drill down to find that 70% of total giving comes from individuals, and almost a third of all giving was attracted through religious institutions. [15,16]

The concern is not so much that people will stop or reduce their giving. Rather, it is that they will adopt strategies to maximize their deductions where possible. “Some people may double up on donations one year, do none the next,” Mr Sandler explained. “This then leads to a larger social question. Every-other-year or every-third-year receipt of goods could create cash flow problems.

“How do you organize for lots of incoming this year, then nothing from those sources for the next two years?

“I’m getting calls [from taxpayers] on this.”

Little more than a week into this new year, Forbes ran an article headlined “21 Million Taxpayers Will Stop Taking Charitable Deductions Under The New Tax Law.” CBS News was even quicker to estimate the negative impact. Then only time will tell how much concern is in order here. [17,18]

References

1. “Your House Is Probably Not on the Market in Saline, but Maybe It Should Be” Dell Deaton (April 8, 2018) Saline Journal.
2. “More Americans want to downsize their homes than supersize them” Alessandra Malito (March 3, 2017) Market Watch.
3. Sauk Trail Storage (home page).
4. Simply Self Storage (home page).
5. U-Store (home page).
6. “National Thrift Shop Day Highlights Expanded Giving, Shopping Options” Janet Deaton (August 17, 2017) Saline Journal.
7. Goodwill Industries of Southeast Michigan (home page).
8. Nu2U Resale Store (home page).
9. Salvation Army (home page).
10. “Giving USA 2017: Total Charitable Donations Rise to New High of $390.05 Billion” Giving USA.
11. “You Need to Start Thinking about Your 2018 Taxes Now. Seriously.” Dell Deaton (January 5, 2018) Saline Journal.
12. “There’s No Reason to be Surprised by Your Personal Income Taxes” Dell Deaton (September 25, 2017) Saline Journal.
13. “Consider These Answers for Any of Your Christmas Mis-Givings” Janet Deaton (December 26, 2017) Saline Journal.
14. “About Schedule A (Form 1040), Itemized Deductions” IRS.
15. “How much does average American taxpayer give to charity and why could it fall in 2018?” Matthew Frankel (July 6, 2018) USA Today.
16. “Charitable Giving Statistics: Total Giving, 1976-2016” National Philanthropic Trust.
17. “21 Million Taxpayers Will Stop Taking Charitable Deductions Under The New Tax Law” Howard Gleckman (January 11, 2018) Forbes.
18. “Charitable giving to take a hit from the tax law” CBS Money Watch.