Note: As of 2017, mortgage interest is (effectively) no longer tax deductible for families, because the Standard Deduction was increased, making all deductions that aren’t given special treatment moot (cash contributions to charity have a special call-out, and there may be others like student loan interest—consult your tax professional, I am not one).
If you are single, and have a large mortgage, the amount of interest(and other deductions like property taxes) over your standard deduction does provide some tax advantage.
This was a bigger deal back pre-2000 when mortgage interest rates were ~6% instead of the ~3% they are now: prices have gone up, and more of the monthly payment is non-deductible principal, not interest.
cash contributions to charity have a special call-out
Is this true? I don’t think it is. From irs.gov: “You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions.”
Here’s how the CARES Act changes deducting charitable contributions made in 2020:
Previously, charitable contributions could only be deducted if taxpayers itemized their deductions.
However, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose. The law changed in this area due to the Coronavirus Aid, Relief, and Economic Security Act.
The CARES Act also temporarily suspends limits on charitable contributions and temporarily increases limits on contributions of food inventory. More information about these changes is available on IRS.gov.
Three hundred dollars is a pretty minimal deduction. I expect there are at least a few effective altruists on here who have significant enough charitable contributions that it still makes sense to itemize deductions even with the increase in the standard deduction.
Mentally, I categorize “donating half your income” as “exceptional circumstance” and trust people in that 1% sliver of the population to make the right choice for them.
Also, too, heavy donors probably aren’t the same people looking to retire early
I only give 10%, but that is enough to make itemizing deductions worth it for me, when combined with my mortgage interest. I am also looking to retire early (or at least become financially independent and increase donations substantially). Good financial advice is always relevant to everyone.
Note: As of 2017, mortgage interest is (effectively) no longer tax deductible for families, because the Standard Deduction was increased, making all deductions that aren’t given special treatment moot (cash contributions to charity have a special call-out, and there may be others like student loan interest—consult your tax professional, I am not one).
If you are single, and have a large mortgage, the amount of interest(and other deductions like property taxes) over your standard deduction does provide some tax advantage.
This was a bigger deal back pre-2000 when mortgage interest rates were ~6% instead of the ~3% they are now: prices have gone up, and more of the monthly payment is non-deductible principal, not interest.
Is this true? I don’t think it is. From irs.gov: “You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions.”
From https://www.irs.gov/newsroom/how-the-cares-act-changes-deducting-charitable-contributions
Here’s how the CARES Act changes deducting charitable contributions made in 2020:
Previously, charitable contributions could only be deducted if taxpayers itemized their deductions.
However, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose. The law changed in this area due to the Coronavirus Aid, Relief, and Economic Security Act.
The CARES Act also temporarily suspends limits on charitable contributions and temporarily increases limits on contributions of food inventory. More information about these changes is available on IRS.gov.
Three hundred dollars is a pretty minimal deduction. I expect there are at least a few effective altruists on here who have significant enough charitable contributions that it still makes sense to itemize deductions even with the increase in the standard deduction.
Mentally, I categorize “donating half your income” as “exceptional circumstance” and trust people in that 1% sliver of the population to make the right choice for them. Also, too, heavy donors probably aren’t the same people looking to retire early
I only give 10%, but that is enough to make itemizing deductions worth it for me, when combined with my mortgage interest. I am also looking to retire early (or at least become financially independent and increase donations substantially). Good financial advice is always relevant to everyone.