We had a day to give thanks, now it's time to give back. Tuesday, November 27 is Giving Tuesday where we help others through the gift of time, donations, goods, or your voice.
But new this year, charitable giving may not be as beneficial to your bottom line.
“While it would be nice if we lived in a world where everyone gave to charity because it was a kind thing to do, there are financial implications to that,” said JP Krahel, associate professor of accounting for Loyola University Maryland Sellinger School of Business.
There are tax incentives, or at least that used to be the case.
Studies show that charitable giving is expected to decline 4 percent this year because of the new tax law. The standard deduction nearly doubled to about $12,000 for singles and $24,000 for married joint filers.
“Now, because the standard deduction has gone higher, you'd have to donate more to charity to have it even start counting against your income taxes. So, it means that the tax incentive isn't as powerful for people to make charitable donations,” Krahel said.
TAX DEDUCTION STRATEGIES
Instead of not giving at all, you may want to bundle your donation. Put your typical donation aside and then donate once you have several years built up. The strategy works if you’re nearing the standard deduction limit and need an extra push to be able to itemize deductions.
Another option is to put that lump in a donor-advised fund that grows tax-free and can be gifted to charities over time.
“If you make it so that you're making a ton of donations all in one year, I'm sure the charity will be appreciative and that may also make it so it's tax-advantaged for you,” said Krahel.
Individuals can also take a deduction for charitable donations if it amounts to 60 percent of their income, up from the original 50 percent limit.
Fundraisers for charitable organizations aren't stressing about the change. They believe people give not for the tax deduction but to be a better person.
However, if charities have been marketing tax deductions for gifts, they'll now need to appeal to donor's values rather than their pocketbooks.
If you don't have money to give, consider giving your time by volunteering or sharing charitable causes with your network and on social media.
WATCH OUT FOR CHARITY SCAMS
The Maryland Secretary of State is also warning people to look for these red flags:
- Did the organization refuse to send you financial information?
- Did the charity send you an invoice that said payment was due for a contribution you pledged?
- Does the organization's name closely resemble another charity with a similar purpose?
If the answer is yes, do more digging and consult the state's charity page.
Maryland residents can call 800-825-4510 to check if a charity is registered or search the state's database by clicking here.
The Secretary of State’s Office investigates complaints about charity fraud. To report a potentially scam charity, contact the Investigations Unit at 410-260-3859 or 800-825-4510.
Or contact WMAR-2 News' Mallory Sofastaii at Mallory@wmar.com.