Finish Making Charitable Tax Deductions Now

Financial tips

Finish Making Charitable Tax Deductions Now

Posted by Infinite Wealth Advisors, LLC
8 years ago | December 7, 2015

Senior Couple Using Laptop To Shop OnlineThis is the season for giving, and it just so happens that it’s also the end of the calendar year. That means you need to get your charitable donations out of the way now, so that you can claim them on your taxes in the spring. It’s a busy time of year for everyone, but if you take these steps now, you can ensure a smoother tax filing process in April.

Make sure those charities are legitimate. Con artists know that we’re all in a more giving mood at this time of year, and that we might be busy or distracted. That’s a perfect opportunity to con you out of your money! Investigate charities before writing those checks. Even some legitimate charities might not spend the money in the way you had imagined, so ask for spending reports or perform a little online research before entrusting them with your money.

While you’re at it, make sure your donations are tax-deductible. Many organizations advertise their “tax-exempt” status, but this doesn’t mean your donations will be tax-deductible. They’re two separate things in the eyes of the IRS. A tax-exempt organization doesn’t have to pay taxes on their earnings, but this doesn’t mean your donations can be used as an income tax deduction. Make sure that you can actually use that donation as a write-off on your tax return.

Research your deduction limit. If you want to earn the maximum deduction for charitable giving, do your research before the end of the year. For most people, the limit is so high that you don’t have to worry about it. But in general, you can donate up to 20 percent of your gross income to private charities, and up to 50 percent to public ones. The percentage of your donations that will count as a deduction will depend upon your tax bracket. The more you make, the more your donation will count.

Collect your proof. You will need to have proof of your charitable donations before you can claim them on your taxes. Hopefully you kept every receipt in a separate file, and this step will be easy for you. If you’re not that organized, then you can check your monthly debit and credit card statements. Highlight your donations and put these statements with the rest of your tax documents.

Get ready for next year. You can take steps to make this process much easier in future years. Choose your favorite charities, set a budget for charitable giving, and set up automatic payments via a single credit or debit card. Now your records are in one predictable place, and you’ve maxed out your charity deduction without having to scramble at the end of next year.

For more information on organizing your finances or maximizing your charitable tax deduction, call our office for an appointment.

15161 – 2015/12/10

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