Potential Changes that Could Affect Your 2018 Taxes

Posted: August 24, 2018

Yesterday, August 23, 2018, the U.S. Department of the Treasury and Internal Revenue Service suggested new rules that would regulate the opportunity for federal charitable contribution deductions in cases where the individual plans to get a state or local tax credit. Nothing has changed yet, but we want you to have all information available when making decisions about your upcoming tax-credit giving. You can read the IRS News Release here.

If the proposed amendment passes (again, it is not law yet), tax-credit donations made after August 27, 2018, will not be eligible for both the federal deduction and state tax credit, as they have been in the past.

The regulation will NOT affect you if your total state & local tax deductions do not exceed $10,000. This includes deductions for state income taxes, real estate taxes and personal property tax (e.g., AZ vehicle registrations).

It is not clear when the proposed regulation would be made final, but if approved, it will be retroactive to August 28, 2018.

We will do our best to keep you informed, and we encourage you to consult your tax professional for further information regarding your individual scenario.

No matter the result, this does not change your ability to take the donation as an Arizona tax credit. Donations made after August 27th can still be done in lieu of paying state income tax. This is simply a change to how it is reported on the federal tax return.

Thank you, as always, for your support of what we do.

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ARS 43-1089 NOTICE

A school tuition organization cannot award, restrict or reserve scholarships solely on the basis of donor recommendation. A taxpayer may not claim a tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer’s own dependent.

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