Ten Ways to Make Charitable Gifts Work for You

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The statistics show that Americans are big on giving to charity. The amounts average approximately two percent of the GDP for the country and it is estimated that the majority of the funding is made by individuals versus corporations with approximately eighty eight percent of households giving to charity. In addition to helping those less fortunate and bringing the feeling that you’re doing something to make a difference in the world for the better, there may be financial benefits attached for you as well. It can help to reduce your tax burden to some degree. This is one of the major reasons why some give on a regular basis.

A poll that was aimed at determining the reasons for giving to charity turned up the result that about two thirds of the donors with a high net worth value commented that if there were not tax benefits associated, they would decrease the amount that they contribute to charity. Regardless of your reasons for giving to charity, it’s always a good idea to take whatever benefits you can away from the situation. We’re offering for your consideration, ten ways to make charitable gifts work for you.

  1. When you file your tax return be sure to itemize. This is the only way that you can claim your charitable donations to claim the for tax burden reductions. Lines sixteen through nineteen on the federal tax form are used for this purpose.
  2. Choose charities and organizations that qualify for donation deductions. Not all charities are categorized in a class that will allow you to use your contributions as deductions on your federal tax forms. If in doubt, prior to the donation check on the organizations’ website to see if they have a letter from the IRS that qualifies them. If you can’t find this, then ask their business and fundraising department for confirmation.
  3. Always request a receipt for all donations which are made to qualified charities. Whether you donate cash or other types of donations. There are many people who donate used clothing and furniture to charity organizations not realizing that they can claim them just as easily as cash because they have an assigned financial value. The only way to substantiate that you’ve made the donation is by having a receipt issued from the organization to which the donation was made along with the date included in some place on the receipt along with the total amount.
  4. Keep track of payroll deductions for charitable contributions. This is a popular method that many employers offer to their employees because the donations are automatically deducted. The W-2 form that your employer issues at the end of the year should clearly show the total amount that was deducted from your paycheck for charity and you will be able to use this for claiming credit on your taxes.
  5. Make donations in the amount that will bring you the greatest benefits. This is an incentive because if a charitable donation exceeds the amount that any type of goods or services is exchanged, then it qualifies as a donation that may be claimed on your taxes. You must secure a letter or written confirmation of some type as proof of the transaction showing that your contribution went beyond the value of any compensation received.
  6. Donate stocks which have appreciated in value. By doing so, you can make deductions for the value. In essence, you will receive a double tax benefit for your donation.
  7. Consider donating real estate that has appreciated in value. By doing so, you will receive a greater tax benefit. You will be able to deduct the fair market value of the real estate. In addition, you will also have the opportunity to avoid paying capital gains taxes.
  8. Volunteer your time to charitable organizations and keep track of all associated expenses. There is no allowance for donating time, but you can certainly deduct the expenses that you incur doing so. Keep receipts for any out of pocket expenses that are not reimbursed by the organization. They must connect directly with the services to qualify. Some examples of these include parking fees, tools, travel expenses or supplies. You must have dated receipts in order to use these deductions.
  9. Be aware of the limitations that the IRS places on charitable donations. Appreciated capital gains assets can only be deducted for up to twenty percent of your adjusted gross income. Non cash assets may be deducted up to thirty percent of your AGI and cash contributions may not exceed fifty percent of your AGI. It’s important to know that you can carry the excess over for the next five years under certain situations.
  10. Watch your calendar. You can only take deductions for contributions that are made within the calendar year ending with December 31st. If you use credit to make charitable contributions, all that you need is the written documentation that you made the pledge even if they don’t show up on your account until after December 31st. The same goes for checks that have been written and mailed off before the deadline. Even if they are not cashed until after the first of the year, they may still be included for the tax current tax year and claimed as deductions.

Final thoughts

Charitable giving truly helps to make the world a better place. Regardless of the charity chosen, progress is being made to fill a gap or meet a need and this is a very good thing that the government is willing to offer rewards for doing. The ten tips provided here are intended to give you ideas on how you can make a difference for somebody else while helping yourself in the process. Some of the federal regulations with regard to exemptions for charitable donations can get complicated.

It’s important to be aware of all of the rules that are associated with the type of giving you engage in so you will be able to maximize the potential return for the charitable offerings that you contribute throughout the year.


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