5 year-end tax tips for charitable donations
With more than $300 billion donated every year, America is No. 1 for generosity. Of course, all that giving has benefits when tax time rolls around.
Say what you want about Americans, there's no denying the USA is the most generous country on Earth.
According to Philanthropy magazine, America gives $300 billion annually to charity, with 79 percent coming directly from individuals and the rest from foundations (15 percent) and corporations (6 percent). It's light years ahead of the competition, Philanthropy says:
Per capita, Americans voluntarily donate something like seven times as much as continental Europeans. Even our kissing cousins the Canadians, whose culture resembles ours in so many other ways, give to charity at substantially lower rates, and at half the total volume of an American household.
Philanthropy cites the high rate of givers "from the most religious nation on earth" and America's" deep-rooted tradition" of helping the less fortunate as the biggest drivers of charitable giving growth in the U.S. Giving is especially strong during the holidays, with 64 percent of Americans planning to donate to charity this month.
If you do give before Dec. 31, the experts at Turbo Tax offer some tips that could result in "big savings" on your next tax bill:
Use a credit card. Charitable givers should know that credit card payments are deductible in the year they are charged, not the year they are paid. In other words, you can donate this year and pay next year (in January, ideally). Plus, if there's any fraudulent activity linked to the donation or to the charity, you'll have more leverage in getting your money back from your card carrier.
Give a gift, pocket the deduction. Crowdfunding websites such as Razoo allow you to give charitable giving "gift cards" as holiday presents (from $10 to $500) and get the best of both worlds: the happiness of giving and satisfaction of claiming the charitable donation.
Check the charity out. Charitable giving sites such as Razoo also let givers check more than 1 million charities to ensure their status as an organization worthy of the donation.
Get a receipt and keep it. It's advisable to track charitable donations so you can be sure to account for every dollar come tax time. Ask your charity for a receipt and keep a file active on all your donations. The list will come in handy around tax time.
Know the rules on clothing and furniture. According to the Internal Revenue Service, to qualify as a deduction, "clothing and household items donated to charity generally must be in good used condition or better." There is a fairly big exception, the IRS adds: "A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances and linens."
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