Dotations to the Arts Tax Deductible Donate Art to Charity Tax Deduction
The Issue: Charitable Revenue enhancement Deduction
Tax reform debates and mounting federal deficits have put charitable revenue enhancement deductions onto the chopping block as a possible style to increase acquirement for the federal government. This would negatively touch nonprofits who rely on the deductions every bit an incentive for donors to give generously. Similarly, artists and writers have lost their ability to claim the full value of works the works of art they donate, which has resulted in a sharp reject in such donations. Americans for the Arts tracks proposed legislation in order to prevent further losses in deductions and the advocate for the re-instatement of artists' and writers' ability to merits deductions for donated works of fine art.
Focus Forward Toward Solutions
Keeping Charitable Tax Deductions
2017 marks the 100th anniversary of the charitable contribution deduction! Since 1917, contributions made to 501(c)(3) nonprofits take been revenue enhancement-deductible, in office equally upshot of wide recognition of nonprofits' do good to the public good. The nonprofit arts sector relies on charitable gifts from donors accross the economic spectrum; for instance, approximately 40% of financial support for nonprofit performing arts organizations is derived from charitable giving.
While the comprehensive tax reform police force enacted in 2017 preserved the charitable deduction for those who itemize their taxation returns, the number of itemizers has fallen dramatically, reducing the number of Americans eligible to merits the charitable reduction. In 2020, the Coronavirus Aid Relief and Economic Securities Human activity, besides known as the CARES Deed, expanded the charitable deduction to not-itemizers, assuasive for a universal higher up-the-line charitable deduction of up to $300 per individual. Information technology too increased the deduction for qualified charitable contributions fabricated by itemizers from 60% of their adjusted gross income to 100%.
Electric current advocacy efforts aim to further the strides made under the CARES Human action by increasing the to a higher place-the-line deduction for charitable giving on federal income taxes valued at up to one-third of the standard deduction. The bipartisan Universal Giving Pandemic Response Deed (S.4032) and the companion House bill H.R.7324 would both allow non-itemizers to deduct from their gross income charitable contributions made in 2019 and 2020. Americans for the Arts supports these efforts, as charitable contributions are peculiarly important for arts organizations given the loss of ticket and programming revenue incurred by coronavirus pandemic.
Regaining Fair Deductions for Artists and Writers Making Gifts
Prior to 1969, artists, writers, and composers were immune to take a fair-market value deduction for their works donated to a museum, library, or archive. In 1969, Congress changed the law, and artists could merely deduct the cost of materials used. The impact on gifts made to cultural institutions was immediate and drastic:
- The Museum of Mod Art in New York received 321 gifts from artists in the 3 years prior to 1969; in the three years after 1969 the museum received 28 works of art from artists—a subtract of more than 90 percent.
- The biggest loser was the Library of Congress, which annually received xv–20 large gifts of manuscripts from authors. In the iv years after 1969, it received ane gift.
Evidently, the ban on artists deducting the market value of donated works disincentivizes them from making gifts to cultural institutions. This in plough harms the public by limiting the corporeality of accessible contemporary artwork and neglecting an important function of our country's cultural heritage.
The Senate has passed artists deduction legislation v times in previous years which would permit taxpayers who create literary, musical, artistic, and scholarly compositions or like property a fair-marketplace value tax deduction for contributions to certain tax-exempt organizations, but the bills have not been reviewed past the House. In 2019, Rep. John Lewis (D-GA) reintroduced the Creative person-Museum Partnership Act (H.R.1793), which would allow artists to have an income tax deduction for the fair market value of their piece of work when they donate information technology to charitable collecting institutions. Americans for the Arts supports these bills!
Resources
- Discover more details in the Tax Policy (pdf) and Tax Fairness (pdf) Issue Briefs in the Congressional Arts Handbook.
- Key Senate and House Committees for tax reform
Source: https://www.americansforthearts.org/by-program/reports-and-data/legislation-policy/legislative-issue-center/charitable-giving-tax-reform
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