The new tax law, effective after 2017, and how it affects Charitable Contributions and Medical Expenses:

Charitable Contributions

- The 50% limitation under Code Sec. 170(b) for an individual’s cash contributions to public charities and certain private foundations is increased to 60% for cash contributions made in 2018 through 2015.

- The amounts of benefits received by charitable donors that are considered to be inconsequential have increased for 2018. Items are considered “inconsequential” if: (1) the value of all benefits received isn’t more than $108 or (2) the amount contributed to the charity is at least $54 and the donor receives only token benefits (bookmarks, calendars, mugs, posters, tee shirts, etc.) generally costing no more than $10.80.

- For contributions made in tax years beginning after 2017, no charitable deduction is allowed for any payment to an institution of higher education in exchange for which the taxpayer receives the right to buy tickets or seating at an athletic event.

- Certain charitable deduction limitations are suspended for individuals making “qualifying charitable contributions” for relief efforts in the California wildfire disaster area.

- Certain charitable deduction limitations are suspended, and special carryover rules are provided, for corporations making “qualifying charitable contributions” for relief efforts in the California wildfire disaster area.

Medical Expenses

For 2018:

The “floor” beneath medical expense deductions is 7.5% for all taxpayers.

The maximum amount of premiums paid for a qualified long-term care insurance contract that are deductible as a medical expense are: for individuals age 40 or less, $420; more
than 40 but not more than 50, $780; more than 50 but not more than 60, $1,560; more than 60 but not more than 70, $4,160; and more than 70, $5,200.

The mileage rate for use of a car for qualified medical transportation is 18¢ per mile.

Contact us for questions about the new tax law and how it may affect you.