Davidson Law Group: Tax and Legal Repercussions When Giving to Charity

Davidson Law Group Explains the Effects of Giving to Charity

Are you passionate about a particular charity in Texas?

Whether you plan on giving a sizable gift before or after you pass away, it’s best to include charitable giving in the estate planning process. The attorneys at Davidson Law Group are here to guide you through each step, as we explain the tax and legal effects of charitable giving in today’s blog post.

Contributions, Gifts, and Donations

The words contribution, gift, or donation are often used interchangeably and usually refer to property or money given by a donor. Donors claim charitable deductions on their individual tax returns. The donor and his/her tax advisor must decide the details of the deduction, such as how much to subtract, when, and how to deduct it.

Tax-Deductible Donations

Donors love to hear that their contribution is tax-deductible. In order for this to happen, it depends on several factors — who the donation is given to, when the donation is made, the donation’s purpose, and the donor’s tax situation. The IRS dictates certain rules on donations, which require documentation and tax filings by nonprofits and the donors. Sometimes the rules limit the amount that the donor can reduce.

Related Post: A Case Study of Charitable Giving  

The Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (TCJA) of 2017 simplified the tax filing process for many households and made many changes to the individual income tax. The act maintains the continuing personal tax deduction for gifts to charity. Although changes were implemented to limit itemized deductions, donors must still apply the general rules to their specific circumstances. Every donor has a unique situation, and if you follow IRS rules about documenting your gifts, you can deduct charitable contributions from your taxable income. To learn more about the impact of the new tax law, consult the attorneys at Davidson Law Group.

Be Careful With Promises

With tax deductions for charitable giving, the nonprofit has responsibilities in addition to the donor. A nonprofit shouldn’t promise you that a contribution is deductible. Be careful with misleading statements in thank you letters. Instead, a nonprofit letter should read, ‘your gift may qualify as a charitable deduction for federal income tax purposes’.

Related Post: What You Should Know About Donating Real Estate to Charity

Davidson Law Group Can Help

When it comes to estate planning and charitable planning, our expert attorneys are ready to help you. We can develop a game plan for giving to the charity that works best for you. Contact the Davidson Law Group in Fort Worth, Allen, or Tyler to schedule a free consultation.