This time of year many people find it in their hearts to give. They’ll give to friends, family, loved ones and charitable organizations that can help maximize the gift such as a church, charity, or foundation.
Last week I had written about the law of reciprocity and giving, and this week I’d like to mention how you can make your giving work in favor when tax season rolls around. As of this writing there are about 11 days left in 2013. Some individuals will be looking to see how much they can give or how much more they can give in order to receive the biggest tax deduction they can for charitable giving.
Of course, gifts to friends and family are not deductible, but there are times when gifts or donations are completely deductible and may be to the tax advantage of the person giving or donating the gift.
According to IRS Publication 526 there are some of the organizations that can receive and therefor qualify the giver for a potential tax deduction:
- Churches, synagogues, temples, mosques, and other religious organizations
- Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park)
Author’s note: I get a kick out of “reduce the public debt”
- Nonprofit schools and hospitals
- The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc.
- War veterans’ groups
One great way to give this Holidays season is to make a donation to your favorite charity. Another great way (and something my wife and I practice) is when new gifts come in to either us or our children, we make a list (or stockpile – thank you grandparents!) of items our children no longer play with or my wife and I no longer need such as clothes, games (it was tough giving up Hungry, Hungry Hippos), or household items and donate them to our local Goodwill.
Many of the items donated are tax deductible and here at the BFP World Headquarters Jim and I have some excellent resources to put a true dollar amount on the items donated. Generally, the charitable deduction is going to be limited to 50% of AGI and in some cases 20% or 30% – depending on the type of organization or type of property given.
Should you want to make a donation of money there are many organizations such as your church, Goodwill, The Red Cross and others that will gladly accept the needed funds and happily issue a receipt for your records. The Red Cross has been busy with the typhoon relief in the Philippines and locally (just an hour or so up the road) with the efforts to help the town of Washington, IL recover from the devastating aftermath of an F4 tornado.
Finally, as the saying goes, “I’m not against paying taxes; just not more than my fair share” may also be in the thoughts of taxpayers this coming tax season. Many tax payers are happy to donate money and items to help reduce their tax burden and or give the money to an organization they feel may be more efficient and astute and allocating their hard earned money – rather than paying the money directly to Uncle Sam via a higher tax rate.An IRA Owner's Manual or if you'd prefer the Kindle version (and let's face it, ALL the cool kids do!), you can find that at this Kindle version link.