While it might not seem possible that we are already at year end, there is still time for some last minute tax planning. Maximizing charitable giving or adding an electric vehicle are two to think about.
Several changes affect charitable giving. Pease limitations that restricted certain deductions available to high-income taxpayers on donations no longer exist. And charitable expenses can be deducted up to 50 percent of adjusted gross income for those who itemize.
Increase in the standard deduction
The threshold to itemize deductions doubled in 2018 to $24,000 from $12,000 for married couples ($12,000 to $6,000 for individuals). This means some taxpayers will no longer see a benefit from charitable giving on their tax returns.
As tax policy affects behavior, the United Way is one charity that has reported fewer donations and smaller gifts in line with predictions. The impact on hospital foundations and college endowments has not been as great, because wealthy donors are still receiving tax benefits.
While not all philanthropy is based on tax deductions, overall giving is expected to drop.
Electric vehicles credit phase out
Tesla recently reported it has sold more than 200,000 electric vehicles. This triggers an IRS phase out of the $7,500 tax credit for purchasing a plug-in electric car. On January 1, 2019, the credit is reduced to $3,750.
If you have been planning to upgrade to an electric vehicle, it may make sense to do so as soon as possible. The notice from the IRS mentions acquiring the vehicle. While Tesla reported production and logistics delays over the year, it delivered 83,500 vehicles in the third quarter.
The end of the year is a good time to consider where you stand and make some last minutes tweaks.