Making charitable contributions is a great way to help people in need while maximizing tax benefits, creating a win-win. Donations to qualified 501(c)(3) organizations can shrink taxable income, saving hard-earned cash.
Is charitable giving a part of your financial plan? If that's one of your goals for this year or in the years to come, reach out and we can talk about how to make your goal a reality.
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Here are 4 tips to consider when selecting a charity, donating, and claiming contributions:
1. Choose impact. CharityNavigator.org determines which organizations direct most of their donations toward programs, not salaries.
2. Confirm donations are tax deductible. Visit the IRS website for Tax Exempt Organizations to choose a qualified charity. Be aware of the maximum amounts allowed to be deducted from your adjusted gross income. If they do exceed it, defer them to subsequent tax years.
3. Offer charities more than cash. Donating items and time instead of money allows you to reduce your taxable income by itemizing property donations, travel expenses, and other costs. Taking this claiming option, however, only makes sense if your deductible expenses exceed the standard deduction. Instead, consider doubling up your charitable contributions and donating every other year. This strategy can be particularly beneficial if your annual deductible expenses are close to the standard deduction amount.
4. Get receipts. The IRS requires a receipt for any donations made over $250. So keep them with your tax documents.
We’d be happy to talk with you in more detail about your donation amounts and their timing to ensure they have the most beneficial impact on your taxes.
If you’re interested in exploring the possibilities of adding charitable giving to your financial plan, let’s connect!
This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice.
One of the Win-Wins of Giving
December 02, 2022