Making a charitable donation not only helps those in need, it can also have important tax benefits for you.
Giving Back
Adapted from an article that originally appeared on LearnVest.com.Giving to our favorite charities is a worthy way to end the year. Not only can buying gifts for a family in need or helping out at a soup kitchen on Thanksgiving Day be fun, it can also offer financial benefits.
· For most people, it makes sense to give at the end of the year so their money can earn interest throughout the year before they donate it. (More here on when it doesn’t make sense to donate at the end of the year.)
· Consider whether you want to give to a big charity or a small one. At a large organization, your individual contribution might be one of thousands, but the combined impact could affect great change. On the other hand, a small organization may not have a broad impact, but your gift alone could make the difference for one individual or family.
· Pay attention to the holiday giving drives that they launch: Is there an end-of-year match that will double your dollars? Will you receive a nice calendar that will remind you of the organization throughout the year? Do you even see a type of donation that would make a great gift for someone (i.e. adopting one animal of an endangered species)?
· Make sure that all the charities are proper 501(c)3 organizations, meaning that they are registered with the IRS as tax-exempt organizations. You can find out by searching for the organization in the IRS non-profit charities database, which has the complete list of organizations holding 501(c)3 status. If your chosen charity is not on this list, your contribution won’t be tax-deductible.
· try to give to an organization that actually gets the results you seek. You can get a sense of effectiveness through the websites listed above as well as through the Better Business Bureau, all of which rate charities based on factors such as how they spend their budgets, how much they spend to raise funds and how transparent their finances are.
If you still feel you need more information to make a good decision, call the organization itself to find out what they are accomplishing in your area of interest, or if they have special holiday fundraising programs to which you can donate.
· Be sure to get a matching gift from your company if it offers that as a perk. Company matches are a quick and easy way to increase your impact.
· if choosing between sending a check or attending a charity event, opt for the direct donation. As Charity Navigator puts it, “Special events, such as galas and golf outings, are notoriously inefficient ways to raise money for a charity. Not only are these events outright costly (invitations, catering, entertainment, and so on), but planning a fancy ball often diverts staff time away from the charity’s mission.”
Also, a straight-up donation is better for your taxes. If you itemize your deductions, you’ll be able to deduct the full amount of your donation, whereas, if you were to attend a gala, you wouldn’t get to write off the full amount of your ticket, because the costs associated with the gala ticket (dinner, alcohol, etc.) are not counted as part of your donation.
· Try out a mini-volunteering opportunity like Sparked.com, a microvolunteering site that allows you to give your time online. On Sparked, non-profits post jobs that they need done on a computer, and if you have ten minutes or a full hour, you can log in and help them with their work. It helps non-profit organizations save the money they would spend on hiring someone to do the job, and helps you give even if you don’t have cash to spare right now.
How to Get a Tax Deduction
You’ll only get a tax deduction if you itemize your taxes.
This only makes sense for people whose deductions would be greater than the standard amount, a category that can include property owners, business owners and people with numerous medical expenses. If you’re not sure whether it makes sense for you to itemize, consult an accountant or a tax service.
· In order to get the deduction for your 2011 taxes, you must donate the money on or before December 31st. However, if you are buying property and your accountant expects that you will itemize your deductions next year, then it may make sense for you to wait until January to donate. That way, you will receive the full tax benefit of your gift and, as long as your charity’s fiscal year does not end December 31, the gift will still fall within their tax year.· If your donation is less than $250, you only need a bank record or receipt; if it’s more, the organization must provide a written confirmation. If you donate stock or anything else beside cash, the deductible amount is fair market value of the property.
Charitable donations are supposed to be about the giving and not so much about the getting.Try donating to a charity that you feel strongly about and a charity that has special meaning to you.The details mentioned above are very useful for giving charity to needy people and this can help many people who are interested to give charity to help poor families.
ReplyDeleteKnights of Columbus Insurance