New Tax Law and How it Affects Your 2018 Tax Breaks

New Tax Law and How it Affects Your 2018 Tax Breaks
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Individual giving money to the Salvation Army
Salvation Army

In this season of giving, non-profits may see fewer donations. That's because last year's new tax law has altered some incentives for charitable giving. Financial advisers tell MPB's Ashley Norwood how to take advantage of tax breaks for 2018.

Four days remain in this year and Donna Davis of the University of Mississippi says there's still some time to strategize your tax deductions.

"Thinking about maybe selling something, you want to consider how many capital gains you have and how many capital losses you're going to have. If you have a big transaction coming up so you can deduct those taxes on this year's return," said Davis.

However, the number of households in America itemizing their tax returns, including charitable gifts, is estimated to drop from 37 million to about 16 million this year. That's according to data from the Tax Policy Center.

Nancy Anderson, an independent financial advisor in Ridgeland, explains why.

"We have higher deductions. So for a couple, they have two times 12,000 or 24,000 that they can deduct. So if they don't go above that amount, then it really doesn't help you that much to get in a hurry and make those donations," said Anderson.

The Trump administration's Tax Cuts and Jobs Act almost doubled the standard deduction for singles as well. It is rising from $6,350 to $12,000. Anderson says those adjustments could affect nonprofit organizations who receive a large portion of their donated revenue from the community.

According to a report by Giving USA, individuals gave 70 percent of the more than 400 billion dollars donated to charity in 2017. Ashley Norwood, MPB News.