The holiday season has kicked into gear and it’s a great time to think about those in need. Giving Tuesday, a movement that encourages us to reach out by volunteering or donating money, makes connecting with our communities even easier. This year, Giving Tuesday is on November 29th. Charitable organizations looking to meet their fundraising goals will be reaching out for year-end donations.
Taxpayers can potentially reduce their tax liability and simultaneously help others. But how do you know where to donate so you feel confident that you made a smart choice? Before you take out your wallet, review the tips below so both you, and your charitable organizations, benefit the most.
Consider your options
There are so many wonderful charities, it’s hard to choose. Large organizations create a broad impact across the world and encourage you to be part of a bigger movement. Local non-profits make a difference right in your neighborhood and can get you more connected with your nearby community. Think about which groups feel close to your heart. Do you love helping animals, the environment or those affected by a recent event? Make a list of how you want your money to benefit others. If you feel connected to several groups, consider sharing your resources. However, you slice it, keep good records for your end-of-year financials.
Get background info
Once you’ve found the organizations that have piqued your interest, do your research. Make sure each company is a 501(c)(3), meaning that it’s registered with the IRS as a charitable organization. Understand the true goal of the non-profit. Learn about how effective they are at accomplishing their mission versus spending money on administrative costs. If the group is local, see if they offer tours of the facility so you can get an upfront look at how your donation will be used. You can also use a site like Charity Navigator, which rates each company based on financial performance and accountability.
Review the current tax laws
The biggest benefit to donating is the help we provide others. But getting a tax benefit eases our finances and can potentially allow us to donate more in the future. In 2021, the IRS allowed taxpayers a deduction of up to $300 ($600 if married filing jointly), but in 2022 that benefit is no longer available. This law change means that only people who itemize their deductions can financially benefit from donating to charity, which has become significantly less since the standard deduction was raised in 2018. One way to still get a tax benefit is to make a larger charitable donation every few years instead of several smaller gifts. You can also pool cash donations with non-monetary donations for a bigger impact.
Check your house for unused items
There are lots of ways to give. Companies collect used clothes, tools or electronics they can sell to raise funds. Do you have old musical instruments hanging around the house, a car you don’t need anymore or even a wedding dress you want to get rid of? These items can be donated if you find the right organization. Many non-profits will come to your house and collect bags of used clothes and other furniture or toys. Non-monetary items are tax deductible at their current value which is the amount you would get for the items if you sold them on the open market. Ask the organizations for a written acknowledgement of the donation for your records and keep them in a safe place to grab when you prepare your tax return.
Many companies will match part or all your charitable donations. Check your employee benefits or ask a human resources representative if this is something your company offers. These benefits are often overlooked and go unused. By combining your donation with a company match, you get to have a say in where your company makes contributions. Your money also goes further in helping the charitable organization and the recipients will be thankful for the additional funds.
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We hope you found this helpful. This article is based on information available in November 2022 and is subject to change. It is provided as a convenience and for general information purposes only. Our content is not intended to provide legal, tax, investment, or financial advice or to indicate that a particular TD Bank or third-party product or service is available or right for you.
For specific advice about your unique circumstances, consider talking with a qualified professional.