Next steps
In all, these findings demonstrate taxpayers may still be on autopilot from 2017 and have not updated their tax strategy to align with tax code changes. Given the confusion around the new standard deduction, it may take until they file their 2018 taxes to completely absorb the impact of the changes and potentially adjust charitable plans. Therefore tax reform’s influence on giving at large will likely not be fully known until 2019.
Given donors’ desire to maintain giving combined with information gaps around tax reform, our research also reinforces the need for education around post tax reform charitable strategies. More than a third of charitable giving occurs in the final three months of the year, with many waiting until December to make donations. Without understanding their options, taxpayers may not be able to make the decisions that would allow them to best maximize their 2018 giving.
With this in mind, financial and tax advisors should be proactive in reaching out to clients with guidance on how they may wish to alter their philanthropic plans this year. Similarly, charitable donors should take steps to arm themselves with answers regarding the impact of tax reform on their personal situations, to best position them to make the best decisions regarding their year-end giving. These questions include whether they should make any adjustments to their giving plans, whether to give assets other than cash, and whether to make use of strategies such as bunching or the use of charitable giving vehicles.
4 questions donors should ask about tax reform
Charitable giving is a core value and commitment for a majority of American taxpayers. As they approach their first “giving season” following tax reform, donors can affirm that commitment even as they potentially adjust their approach to maximize their giving levels.
Learn more about the questions to ask about tax reform and giving, or get ideas for smart charitable tax strategies.