Charity Can Give Back as Much as it Costs

English: USA charitable giving 2009. Data sour...

English: USA charitable giving 2009. (Photo credit: Wikipedia)

As the end of the year approaches, the Holiday season serves as a reminder for many of us to share our blessings with those less fortunate or a favorite charity. Kindness is always good policy when it comes to basic humanity, but it can also make good sense economically.





Most of us are vaguely aware that the tax laws enable us to deduct our charitable giving, but how many of us take the time to actually itemize and claim all of the deductions we’re entitled to? You are entitled to deduct up to half of your adjusted gross income. If you give more than half of your income, you can roll those deductions forward, deducting them next year (or up to five years later).

What You Can Give and Who You Can Give It To

In addition to cash gifts, you can deduct the fair market value of other goods you give away. If you give clothing to Goodwill, you can deduct the reasonable value of your gift. If you offer pro bono services to charity, you can deduct any legitimate expenses you incurred in the process of helping the charity.

In order to claim a deduction for charitable giving, the recipient must be a qualified non-profit organization. A few examples include:

  • Churches, mosques, synagogues, and other houses or worship or religious organizations
  • Governmental agencies
  • Nonprofit hospitals
  • Nonprofit schools
  • Public works such as parks
  • American Red Cross
  • Goodwill
  • Salvation Army
  • Scouting troops
  • Veterans’ benefit groups
  • Your alma mater, as long as it is nonprofit

For cash gifts under $250, you can use canceled checks as proof of your donation. For gifts over $250 or gifts of goods other than cash, you should request a statement from the receiving organization as proof of your charitable giving.

Knowing the Numbers

In some cases, you can save money on the amount of taxes you must pay by giving more to charitable causes. While this isn’t the only-or even the best-reason to give to charity, it makes sense to give more to causes you believe in and want to support if it ends up saving you money on your taxes at the end of the year.

It’s always a good idea to check with a tax accountant when determining how much charitable giving is beneficial to your bottom line and to ensure that all donations are appropriately documented. Would you consider giving more to charity if the tax benefits equaled or outweighed the cost?

 


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