One place where EAs paying taxes in the US can probably have differential impact is in making donations less than the standard deduction(s) they can take on their taxes such that they would not benefit from itemized deductions from donating to registered charities. Impact concerns aside, unless you’re donating enough to exceed your standard deduction, you don’t get much or any tax benefits from donating to registered charities, and so all of your donations will be post-tax anyway so you have a unique opportunity to give funds to EA-aligned causes that are otherwise neglected by larger donors because they can’t get the tax benefits.
Some examples would include giving small (less than $10k USD) “angel” donations to not-yet-fully-established causes that are still organizing themselves and do not or will not ever have charitable tax status and participating in a donor lottery.
Plenty of caveats to this of course, like if you have employer matching that makes it worthwhile to give to registered charities even if you yourself won’t reap any tax benefits, and state-level standard deductions are smaller than federal ones so it’s often worth itemizing charitable giving on state returns even if it’s not on federal returns.
TL;DR: Even though Facebook has only provided $7 million USD in matching funds, EAs have been able to get more than half their donations matched in the last two years and I don’t expect the opportunity to become saturated (by EAs or the general public) this year either. That is, I expect EA donors who take an hour or two to prepare (by reading the EA Giving Tuesday team’s instructions and making a few small practice donations) will still have a 30-70% probability of getting matched (up to $20,000 per donor) this Giving Tuesday, December 3, 2020. (E.g. I’m currently willing to make an unconditional bet at even odds that I will make a donation that is matched by Facebook for Giving Tuesday this year.)
Great idea, I didn’t know that this opportunity existed!
For those like me who don’t know what a ‘standard deduction’ is in the US tax system, here’s a brief explanation:
Even if you have no other qualifying deductions or tax credits, the IRS lets you take the standard deduction on a no-questions-asked basis. The standard deduction reduces the amount of income you have to pay taxes on.
You can either take the standard deduction or itemize on your tax return — you can’t do both. Itemized deductions are basically expenses allowed by the IRS that can decrease your taxable income.
Taking the standard deduction means you can’t deduct home mortgage interest or take the many other popular tax deductions — medical expenses or charitable donations, for example.
In 2020 the standard deduction is $12,400 for single filers and married filers filing separately, $24,800 for married filers filing jointly and $18,650 for heads of household.
One place where EAs paying taxes in the US can probably have differential impact is in making donations less than the standard deduction(s) they can take on their taxes such that they would not benefit from itemized deductions from donating to registered charities. Impact concerns aside, unless you’re donating enough to exceed your standard deduction, you don’t get much or any tax benefits from donating to registered charities, and so all of your donations will be post-tax anyway so you have a unique opportunity to give funds to EA-aligned causes that are otherwise neglected by larger donors because they can’t get the tax benefits.
Some examples would include giving small (less than $10k USD) “angel” donations to not-yet-fully-established causes that are still organizing themselves and do not or will not ever have charitable tax status and participating in a donor lottery.
Plenty of caveats to this of course, like if you have employer matching that makes it worthwhile to give to registered charities even if you yourself won’t reap any tax benefits, and state-level standard deductions are smaller than federal ones so it’s often worth itemizing charitable giving on state returns even if it’s not on federal returns.
Also worth mentioning: Whether you have employer matching or not, all US donors can take advantage of Facebook’s Giving Tuesday donation match (see EAs Should Invest All Year, then Give only on Giving Tuesday and the EA Giving Tuesday website).
TL;DR: Even though Facebook has only provided $7 million USD in matching funds, EAs have been able to get more than half their donations matched in the last two years and I don’t expect the opportunity to become saturated (by EAs or the general public) this year either. That is, I expect EA donors who take an hour or two to prepare (by reading the EA Giving Tuesday team’s instructions and making a few small practice donations) will still have a 30-70% probability of getting matched (up to $20,000 per donor) this Giving Tuesday, December 3, 2020. (E.g. I’m currently willing to make an unconditional bet at even odds that I will make a donation that is matched by Facebook for Giving Tuesday this year.)
Great idea, I didn’t know that this opportunity existed!
For those like me who don’t know what a ‘standard deduction’ is in the US tax system, here’s a brief explanation: