End of the Year Giving
The end of the year brings about the holiday season, when most people are in the mood for giving. Gifts for family, opening your home to friends and family for meals together; gift giving is on everyone's mind come the end of the year. Many nonprofits view the holidays as the "Giving Season." The National Center for Charitable Statistics found that as of 2012, 50.5% of organizations receive the majority of their contributions in the period extending from October to December.
The vast majority of charitable giving is done to help out the less fortunate or support good causes, but given the heavy tax burdens most Americans face, they are also interested in learning about the tax breaks involved in charitable giving. Here's some helpful information regarding your end of the year giving.
Using a Credit Card or Check?
If so, those contributions must be in by the end of the calendar year in which you wish to deduct your giving on taxes. This means that donations charged to your credit card must appear on your final bill of 2017, even if you do not pay it off until 2018. For checks, make sure they are mailed by the final day of 2017 to count for your 2017 taxes.
Don't Forget to Itemize
As an individual, if you want to claim your charitable year-end giving to go smoothly come tax time, make sure you itemize your deductions on Form 1040 Schedule A. This deduction is not available to individuals who choose the standard deduction instead, which means you will have a tax savings only if the itemized deductions exceed the standard deduction amount.
Verify Charitable Organization Status
The only donations you will be able to deduct at year's end are those made to eligible organizations. The IRS has its own searchable online database to help you determine the status of the organization you are considering giving money to at the end of the year. It is worth noting, churches, synagogues, temples, mosques, and government agencies are eligible to receive deductible donations, even if not listed in a database.
Non-Cash Donations under $250
If you are making a small donation under the amount of $250, you will not have to worry about getting a receipt for your donation. However, even though it is not required, it is probably still a good idea to get a receipt. If possible, get a receipt that has information such as the name of the charity, date of donation, and reasonable details on the donated items.
Non-Cash Donations over $250
Now things get a little stickier. If you are donating items with a value more than $250, you will need a receipt for the IRS to view. The receipt must account for the items donated, such as furniture, furnishings, electronics, appliances, and other items.
For non-cash donations that exceed $500, most taxpayers will not claim a deduction above the $500 level. The reason for this is simple; those who donate more than $500 in non-cash items must include a Form 8283 with their return. Are you really interested in filling out more paperwork at tax time?
There is nothing wrong with tracking your charitable donations to make sure you take advantage of the tax deductions built into the nation's tax laws. The government rewards giving, and in fact encourages it, by providing a reward to givers in the form of tax incentives. Remember, regardless of your reasoning, there are many families and individuals suffering in this world who could benefit from your generosity, regardless of the amount you give.
To get help with your tax incentives and fitting donating into your financial plan call Hughes Warren.