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Informed DonatingSubmitted by UDALL CPA Group on April 26th, 2018
The U.S is considered the most generous country in the world, with two-thirds of Americans giving to charities annually. And this number continues to grow, with giving levels increasing every year since 2009.
In 2016, an estimated $390 billion was given to charity in the U.S. – an increase of 1.4 percent over 2015 totals, with individual giving accounting for 72 percent of all giving. Religious organizations led the list of recipients, receiving over 32 percent of individual donations, followed by Education, with 15 percent of donations, then Human Services, with 12 percent.
Whatever cause you support, if you’re ready to open your wallet to support your favorite charity, it’s important that you keep a few things in mind prior to sending that first check.
- Is the organization you wish to donate to a qualified charitable organization? Most religious organizations such as churches, synagogues, mosques and temples are automatically eligible to accept charitable donations, but there are exceptions, so it’s always best to check. But what about the local food bank or animal rescue organization that you’re interested in donating to? To be sure, you can ask to see the organization’s IRS Determination Letter, which will tell you if they can accept donations. If that’s not possible, you can confirm an organization’s status directly with the IRS.
- Any donation given to an individual does not qualify for a tax donation; no matter how worthy the cause.
- Be aware of free gifts. If you write a check for $250.00, but receive two tickets to the organization’s annual gala, you can only deduct the amount of the donation after the cost of the gala tickets have been considered. The same goes for the free t-shirt or commemorative mug. If a free gift is offered in return for your donation, simply ask the organization to factor in the cost and subtract it from your donation total on your receipt or thank you letter.
- Speaking of thank-you letters, be sure you get one, or at least a receipt that documents the amount of your donation. This is particularly important for those giving at least $250.00, as the IRS requires a receipt or letter to document any donations over this amount. And remember to get a receipt for cash, since you’ll have no other way to document the contribution.
- If you’re wondering how the organization in question uses the funds they receive, there are plenty of organizations that provide that information. GuideStar, Give, and Charity.org provide details on organizational health and how charitable donations are used. But more importantly, talk to the Executive Director of the organization if possible. You’ll get a much better idea of how responsible they are with their donations, and how the money is used.
- In order to take a tax deduction for the current year, your donation must be in the hands of the organization by December 31st of that year, otherwise the deduction will have to wait until the following year.
Spending just a few minutes on research will help to ensure that your money is going to a worthy cause that will use it wisely.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.