Q. With the new tax plan, what are the changes for charitable contributions? I’m going to lose some of the property tax deductions, and I want to make sure I don’t owe a ton on April 15.
A. A lot of New Jerseyans are going to feel the hurt from the new tax plan.
You mentioned the cap on property taxes, but that’s not all.
The cap is for the category called SALT, which stands for state and local taxes, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston. The new $10,000 cap is for state income taxes, sales taxes and property taxes.
Also note other important changes.
“Your mortgage interest may still be deductible as long as it’s a first mortgage and not a home equity line of credit (HELOC),” Karu said. “Interest from HELOCs is not deductible.”
Then we come to the change for charitable contributions, which are deductible up to 60 percent of your adjusted gross income. That’s up from 50 percent in past years, Karu said.
Karu said if you are planning on reducing your taxes through charitable giving, consider donor-advised funds as alternative way of making a charitable contribution.
Also be sure you don’t forget about non-cash contributions.
“To be absolutely sure that you will not owe Uncle Sam at tax time, ask your tax preparer to run a projection based a combination of your 2017 and 2018 tax information,” Karu said.
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