The Myth of the Limits on Itemized Deductions

Media misinformation is the real threat to charitable giving. For better or worse, the fiscal cliff deal doesn’t actually cap any itemized deductions.

As the fiscal cliff deal began to take shape at the end of December, media reports stated that the agreement would cap itemized deductions. In the days since the agreement was signed into law, some articles have continued to claim that it limits itemized deductions, including the charitable deduction, and therefore discourages charitable giving. But, it’s all a myth. For better or worse, the new law doesn’t actually cap any itemized deductions.
It’s easy to see why people might think otherwise. The new law brings back to life a provision — in effect from 1991 through 2009, but lapsed from 2010 through 2012 — that Congress calls the “overall limitation on itemized deductions.” But, the name is a misnomer, and not the only one in recent tax legislation. For nearly everyone who is subject to it, the resurrected provision has no economic link to itemized deductions and doesn’t change the tax savings from giving more to charity.

Read more: http://www.american.com/archive/2013/january/the-myth-of-the-limits-on-itemized-deductions