Is This Donation Deductible?

Posted onCategoriesPersonal Finance, Taxes

While recent changes in the tax code have made it less attractive to donate to charity due to an increase in the standard deduction, for some taxpayers, there are still some benefits to be had from donations, depending on your specific tax situation. However, it’s always important to remember that not every donation you make can be tax deductible. There’s a few crucial questions you want to ask that will help you determine whether a given deduction is going to qualify.

First, you need to verify that the organization you’re donating to qualifies as a tax deductible one. While it’s true that most religious or veterans organizations qualify, some organizations might use a name that indicates such an affiliation while not actually qualifying. You can ask the organization directly if they qualify for tax deductible status, but if you have reason to be concerned, the most certain way to verify if an organization qualifies as tax deductible is to check their registration on the IRS website’s tax exempt organization search here. There are some caveats to note, however. Some churches, group ruling subordinates, and governmental units, and other organizations may qualify but not be listed on the IRS website. Information about those groups can be found on the IRS website here.

Once you’ve verified that the organization you are donating to qualifies, you’ll need to make sure that the donation you’re making does as well. If you receive any kind of goods or services in return for your donation, the value of those goods or services would need to be deducted from the value of your donation. For instance, if you sign up to sponsor a non-profit organization and in return receive a welcome basket with items worth $25, that amount would need to be excluded from your tax deduction. If you are donating to a charity as part of raising money for a trip, such as a missions trip, you might be able to deduct those costs, depending on the itinerary of the trip. According to IRS Publication 526, “Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel.”  So your deduction would be depending on the trip not having a “personal pleasure, recreation, or vacation” to it.

Ultimately, it’s crucial that before taking any deduction, you’ve carefully checked the relevant legal guidelines as well as your own personal tax situation. The best way to have peace of mind about your taxes is to schedule an appointment with us today. Our tax professionals will ensure your taxes and your deductions are filed correctly and you get the full return you are due.

The Benefits of Year End Giving

Posted onCategoriesAccounting, Personal Finance, Taxes

The end of the year is upon us, and for many, it’s time to make your final deductible donations for the year. This is a crucial practice that encourages responsible giving to worthy groups, while also allowing taxpayers to reduce their tax burden.

In order to take advantage of charitable deductions, you will need to itemize your deductions on your tax return. This means that taxpayers who instead will use the standard deduction will not benefit. If you are unsure of whether you will be using itemized deductions, we can assist with making some

 

While it’s true that most charities qualify for tax deduction in return for donations, not all do. So first, you need to verify the charity you are donating to qualifies. The IRS has an online tool that can be used to verify charities, which you can find here. It’s worth noting that some charities, like churches, group ruling subordinates, and governmental units will still qualify but not be listed.

 

You may also want to check on the effectiveness of your donation. Several organizations will offer background information or ratings of charities. GuideStar is a website that offers data drawn from public filings with the IRS on different charitable organizations for free. A premium membership will also grant you access to raw financial data, letting you see how the organizations spend the dollars they receive on things like marketing and salaries. The Better Business Bureau offers ratings on charities based on a set of benchmarks, and report when charities refuse to release requested data. GiveWell is a relatively new player in the realm of charity evaluations. They use financial analysis to identify how efficiently lives are saved by the dollars donated to different charities. They also offer full access to the research and data they use to make their determinations, and make suggestions of the charity that offers the highest life saving impact per dollar donated. (Currently, their highest rated charity is Malaria Consortium, which offers treatment to prevent malaria in children in sub-Saharan Africa.)

 

You may want to consider donating locally however. This has the additional benefit of allowing you to be more personally invested in the charity of your choice. Rather than just sending a check, you can also visit and volunteer. Local homeless shelters often need hands to help with laundry or meal service, or you can volunteer with local school programs for benefiting reading skills. Not only does this connect you more deeply with your community, the more holistic approach to giving can lead to a more satisfying experience in the long term.

 

No matter how you choose to give, we will work with you to make sure it’s reflected on your tax filings correctly to give you the best impact. Call us today to schedule time to review your financial plans.