The IRS has changed some of its regulations regarding charitable contributions, which has donors and charities alike confused about what the new regulations will mean.
I’ve been studying information coming out about the regulations and from I can see, the new tax laws will not have a significant impact on regular annual giving for most donors. The elimination of a personal exemption has raised concern, however the standard deduction for most tax brackets nearly doubled to offset the exemption. If you have enough itemized deductions to exceed the standard deduction, the charitable deduction is still available.
On August 24th of this year, the IRS issued further proposed law that would affect state tax credits. This will impact the many Ranch donors who benefit from a state credit by giving to one of our qualified endowments. In the past, donors could receive the state tax credit, and also claim the deduction for the amount of their gift on their federal income tax. With the new regulations, donors must delete the amount of the tax credit from their federal deduction which poses the question, “Which comes first, the chicken or the egg (or in this situation, the state tax credit or the federal deduction)?”
In North Dakota, the state tax credit is 40% of your federal deduction. Legislators will have to make some decisions about how to calculate the credit to make the proposed regulations work.
While the changes create confusion and may feel uncomfortable, I assure you that we have all lived through tax reform before, and we will again!
Thank you so much for your ongoing support of our ministry. At the Ranch, we share Christ’s love with our children, and remind them they can trust in the Lord through times of change. I remind myself of this when I get anxious about the changes, and what they mean for our donors. Our kids are struggling with issues far more difficult than tax reform—if God has a plan for them, He can certainly handle a few changes in tax law!
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Dakota Boys and Girls Ranch is a Christian residential treatment and educational center for children and their families. We help the most troubled, complicated, and amazing kids by providing best-in-class psychiatric therapy and trauma-informed care, where we look kids in the eye, walk with them, and help them become their best selves.