Thursday, January 03, 2013
Fiscal Cliff Bill Phases Out High Earners' Itemized Deductions Including Charitable Deductions
As reported by the Wall Street Journal, the legislation to avert the fiscal cliff passed by Congress on Tuesday (full text of H.R. 8) restores the phase out of itemized deductions for high income individuals. Section 101 of the bill amends current Internal Revenue Code Sec. 68 to accomplish this result. Under the new law, the total of itemized deductions that may be taken by individuals earning over $250,000 and married couples earning over $300,000 will be reduced by 3% of the amount their adjusted gross income exceeds the $250,000 or $300,000 threshold until 80% of the itemized deductions are lost. The itemized deductions impacted include charitable deductions to non-profits, including churches and other religious organizations. Some worry that the new provision will reduce the amount of charitable giving.