Happy October and welcome to our first blog post!

With tax season right around the corner, we want to make sure everyone is up to date with the 2018 Tax credits, especially since there are proposed changes for this year.

These changes may impact your ability to deduct contributions eligible for the Arizona Tax Credits:

Proposed Rule Change

First, there is a proposed ruling (REG-112176-18) going to a public hearing on 11/5/18 which is indicating that any Contributions to Qualifying Organizations eligible for State Tax Credits needed to be contributed on or before August 27, 2018, to count on your Federal Tax Return as a charitable contribution. Any donations qualifying for State Tax Credits made after that date may not be deductible on the Federal return.  Again, this is not a final ruling, but taxpayers who contributed to Qualifying Organizations as a strategy to reduce their Federal Tax due, may not be able to do this if the ruling becomes final and the contributions eligible for the State Tax Credit were not made by 8/27/18.  In summary, if the ruling becomes final, you will no longer receive the double benefit of the Arizona tax credit and the Federal tax deduction after August 27, 2018.

Standard Deduction Increase

Second, the Standard Deductions have increased and you may not benefit from charitable contributions if your itemized deductions are less than the standard deduction:

• Married Filing Jointly: $24,000
• Single Individuals: $12,000
• Head of Household: $18,000

Please note, there are numerous changes to itemized deduction rules for 2018 that could significantly impact your situation and whether you will itemize or take the standard deduction.  In summary, the SALY rule does not apply and you just can’t say “same as last year”.

If you are wondering how this will personally impact you, we are available to provide Tax Projections and Tax Consultations.