The Tax Cuts and Jobs Act was signed into law in the last days of 2017. Stripping all of the sensationalism and yes, even some disinformation, here is what that means for you.
The standard deduction is an amount by which taxpayers are allowed to reduce the adjusted gross income (AGI) declared on their income tax return. If you file the short form, your standard deduction used to be $6,500 for individuals and $13,000 for married taxpayers filing jointly. Under the new law, the standard deduction for single taxpayers and married taxpayers filing separately will rise to $12,000 and the standard deduction for married taxpayers filing jointly will go up to $24,000.
In short, your basic deduction has nearly doubled from what it was before. Good news? That’s great news! It means you will be paying less taxes.
For those who file their taxes using the long form, itemizing deductions like mortgage interest, charitable donations, and vehicle mileage, perhaps things just got easier. In the past you had to collect and store receipts and wear out your calculator finger to get every last deduction that you possibly could. With the new tax law, you automatically get a $24,000 (married filing joint) standard deduction. You can now avoid the hassle and paperwork and expense of filing the long form…unless your deductions will total more than $24,000.
What does this all mean for WarmFuzzy’s?
WarmFuzzy’s is a 501c3 non-profit organization. As such, your charitable gifts and donations are tax deductible. Due to the confusion surrounding the new tax law, some people may be hesitant to donate because they believe their tax deduction may not matter but those people are missing the point. The point is, now you don’t have to track your donations to WarmFuzzy’s so that you can deduct them from your taxes because they are covered by that big bucket of a tax deduction you now have. If you still want a receipt for your charitable donations to WarmFuzzy’s we will be glad to send you one.
To sum it up, under the new tax law many will be able to avoid the extra paperwork and expense of filing the long form because they already have a large tax deduction with no questions asked. Those who have already been filing the short form now have more money.
Life is good.
Check with your accountant or tax professional to see how the new federal tax law affects you.