MINNEAPOLIS — When most people donate to charity this time of year, it's out of the goodness of their hearts — but there's also potential tax breaks a lot of people find appealing.
But to qualify for the full tax break on charitable donations, taxpayers must itemize their deductions on their tax returns.
Before 2017, the IRS says that on average, 30% to 40% of Americans were itemizing on their tax returns. This percentage has gone down significantly in recent years due to changes to the tax laws, which include an increase to the standard deduction amount that Americans can claim on their taxes.
Accountants say the standard deduction essentially doubled and became so appealing to most Americans that it was a better deal to simply claim the standard deduction and not itemize on your tax return.
The IRS says currently, around 10% to 12% of Americans are itemizing on their taxes.
Accountants say that means only about 10% of Americans have the chance to claim their donations to charity and reap the benefits of those tax breaks.
But earlier this year, Senator Amy Klobuchar and 10 other senators proposed a bill to change this.
"The whole idea is to make it easier for people to give and to not just have it be easy for wealthy people to give,” Senator Klobuchar says.
Their bill, which is currently making its way through Congress, would give all taxpayers a chance to claim their charitable donations, regardless of if they itemize on their taxes.
“What we’ve seen nationwide is a reduction in the amount given and we want to make it easier to give, easier for everyone to give to the charity of their choice,” Senator Klobuchar says.
Paul Deakins is the executive director of development at the Salvation Army's headquarters in Minnesota.
He says the Salvation Army saw an immediate drop in donations when these tax law changes went into effect.
"We started noticing it right away, the first calendar year of 2017, we saw a dip — probably about 10%,” Deakins says.
Earlier this spring, the National Council of Nonprofits sent a letter to U.S. senators, asking them to support this bill. Other nonprofit groups have voiced their support as well.
Senator Klobuchar says in recent months, an additional eight senators have signed onto the bill.
She says the bill currently has the support of 19 senators, including 10 Democrats and 9 Republicans.
There is also a companion bill in the U.S. House.
Klobuchar says the bill is headed to the finance committee where it could become part of a much larger tax bill.
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