It is already widely known that the passage of the Tax Cuts and Jobs Act means fewer taxpayers will be itemizing deductions on their tax returns early next year. This means that I will not be spending a lot of time over the next month or so talking about last-minute moves one can make to improve your tax picture. For many, those options have been decrease. This also unfortunately means that I will not be steering as many people to make some late-year charitable donations and then enjoy the tax benefit.

Hopefully, most thought of that latter benefit as a corollary bonus and not the main impetus behind making those donations, for they are still needed.

Giving Tuesday just passed this week, and we are in the time of year when donations reach high levels as feelings of goodwill and hopes of peace drive many to help others. It is not the only time we have had those thoughts this year, though, as recovering from traumatic events like hurricanes and wildfires also necessitated leaning on the generosity of others.

And when you look at the amount of money that can be raised for such wonderful and worthy causes, it can be very heartening. So even if there is a larger chance that making such donations may no longer affect your tax picture, I still want to express the hope that it will not affect your inclination to give if you have the ability to do so.

At the same time, though, there are scammers out there trying to take advantage of this goodwill. It seems that every time a disaster comes along, there are stories of fraudulent people and organizations that pop up to collect money and not pass it along to those they were claiming to help. That is only bound to happen in this more general season of giving, too.

Although it may feel bad to question someone who is claiming to be doing a selfless act, it can do you good to implement a little due diligence and look up the credentials of an organization before making a donation. Sure, there are some large charities that we all know about and trust, but many smaller ones are also doing great work. You may support their mission and just not have known they existed.

So just to ensure that you can feel confident about where your money is going, the IRS offers a Tax Exempt Organization Search online. It provides information on an organization’s tax status, allowing you to confirm it is a tax-exempt entity and eligible to receive tax-deductible charitable contributions. It is an easy check at legitimacy, for if it is a legitimate entity, there is no reason why it would not have formally received tax-exempt status through the agency.

And as always, remember that if something feels fishy, it is worth investigating before you commit to anything. But when things don’t feel fishy, they can instead feel great and wonderful, so please commit to helping there.

It is hard to believe that it has been almost a year since the Tax Cuts and Jobs Act was passed. Because of that, much of what has been discussed in tax circles throughout 2018 has been new rules. Today, though, I think it is worth giving some time to an issue that is a perpetual one – tips.

I think a big part of why this is such an endearing question is because those who make tips tend to see them as separate from their wages. And this makes a lot of sense - they are received in a different way, aren’t always received in a paycheck, and seem to be earned from a customer instead of an employer. In the end, though, the disappointing answer to how tips are handled is that they also are subject to taxes.

I am now going to be even more disappointing for this taxation is supposed to happen no matter how the tips are received. Whether they are received in cash, part of a credit card transaction, or divvied up with coworkers in a sharing arrangement, they are all supposed to be reported and subject to tax withholding.

Legally, employees are supposed to report cash tips received to their employer by the 10^th of the following month. That amount is then to be recorded as part of one’s pay so that the appropriate taxes can be withheld.

But yes, I knowingly prefaced the last paragraph with “legally.” I’m not going to be naïve enough to pretend that some do not report all of their tips, or that there possibly unspoken arrangements in an establishment to not speak of all the tips that come through. So if some tips have never been reported, that is out of our hands here when tax time comes. I am just making it my job to speak of the legal obligations, what you choose to do with that information is in your hands. But yes, when cash is simply handed over, reporting can be tricky and spotty.

When these tips are reported, they are subject to income tax, employee Social Security tax, and employee Medicare tax. It is quite understandable how it can feel it like a hit when you have to pay into multiple areas out of money that already reached your hand. If you keep up with reporting this month by month, though, you can learn to estimate how it will affect your paycheck. Possibly more importantly, though, is that you the regular reporting keeps there from being any big surprises come tax reporting time. When things are done monthly, payments are being made, preventing large ones being needed come April.

The rules on tips can get a little more complicated when you reach higher numbers, but I will not discuss those here. Those don’t tend to be the questions I get when it comes to this area anyway. Instead, it is almost always about whether tips are taxed at all, and now you know the answer.

It happened as it always happens, the country voted and made it through another election. This one, however, certainly felt a little more divisive than most, and the results showed that that division is real. Those results also show that one can’t make financial and tax plans based on election promises.

One of the promises that President Trump spoke about in the lead-up to the election was a Republican plan for a 10% middle-class tax cut. Obviously, this would appeal to many people and speaks to concerns some have that his party’s passage of the Tax Cuts and Jobs Act did more for high-wealth people and businesses than for those in the middle.

For the people this rhetoric spoke to, if that was their biggest concern with the country’s direction, they should have voted on that promise. The Republican Party had already shown it has the ability to pass tax legislation. If it retained majorities in both houses of congress, there was no reason to think that it could not have done it again.

Now, however, with a Democratic majority in the House of Representatives, the chances of this happening are essentially nil. And therein lies the crux of what I want to say this week.

There is nothing wrong, and it is an essential part of our democracy, with voting for the way that you want the country to run, and that often aligns with self-interest. It is great to have a candidate or party speaking to what you want addressed, and feeling they will address your issues and concerns. You just can’t plan ahead based on that information.

For now, the tax rules passed in the TCJA look to be the rules we will be going by for the next few years. Another power shift will likely be needed before anything major can be passed. Heck, if there’s one thing the TCJA is teaching us, it is that even when major tax legislation is passed, it takes time to fully get into the minutiae of it and understand all of its implications.

It is worth spending some time investigating how the rules affect your tax picture and what you can do to make it work in the best way for you. That is a difficult enough experience to work through without making speculative moves based on promises and rhetoric.

And yes, as you take that time and make your moves under the current system, chances are good that you will find rules you wish were different. Latch onto that, feel strongly about them, do what you can to make your voice heard, and continue to vote in the future. That is a powerful act that can help you see the change in the country you want to see. It’s just part of the process, though, and a process that can take a long time to see through to a conclusion. So in the meantime, work within the rules we have, and know that we are here to support you along the journey.