charitable-donation

It’s the final day of my 12 Days of Charitable Giving. To recap, I’ve asked a panel of judges to review a number of deserving charities as suggested by my readers. I’ve been posting one a day for - well, 12 days (I’m clever that way).

In response to a lot of feedback from folks who missed the original post (link in the paragraph above), I’ve decided not to pick a 12th charity and instead, ask for additional submissions from my readers. There are only 5 more days in the tax year. That means 5 more opportunities to make a charitable donation that you may deduct on your taxes (assuming that you itemize). Charities are reporting that donations are down for the year. If you have the means and the inclination to support a charitable organization this year, I highly encourage it. Remember, it’s your chance to do something good and get a tax break!

You can read about our prior 12 Days’ picks here:

12 Days of Charitable Giving: Forget Me Not

12 Days of Charitable Giving: DonorsChoose.org

12 Days of Charitable Giving: Spirit Animal Sanctuary

12 Days of Charitable Giving: Jamison Center

12 Days of Charitable Giving: ALS Hope Foundation

12 Days of Charitable Giving: USO

12 Days of Charitable Giving: Susan Komen for the Cure

12 Days of Charitable Giving: RIF

12 Days of Charitable Giving: African Well Fund

12 Days of Charitable Giving: Valley Churches United

Thanks to all who submitted the names of charitable organizations! And thanks, too, to my guest judges: Sally Andersen (Living Without Meat), Rana Bakhtiari (Rana Real Estate), Chris Erb (Erblawg), Robert Flach (The Wandering Tax Pro), Elisa Jähner (Erblawg), Sean Kelly (Franchise Pick), Madeline Martin (One Vote Matters), Doris & Wayne Phillips, and Anne Wayman (About Freelance Writing).

Now, it’s your turn (one more chance). What charitable organizations are on your radar this year?

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It’s the fourth day of my 12 Days of Charitable Giving (I know, I missed a day - sorry!). To recap, I’ve asked a panel of judges to review a number of deserving charities as suggested by my readers. I’ll be posting one a day for - well, 12 days (I’m clever that way).

I encourage you to check out the charities voted “most deserving” by my readers and judges. Remember that these are just suggestions and, in most cases, we can’t personally vouch for the good work that these folks do. So be smart. And be generous.

Today’s featured charity was submitted by Becky Sheldon. Becky writes:

And here’s where there’s a significant difference between the Jamison Center and other organizations: a search at irs.gov will not show Jamison as a result. That’s because, according to the web site, the Jamison Center is operated by the Human Services Department of Kern County. By definition, donations to government entities in the US are tax exempt so long as they are intended to be used for a public purpose. That is certainly the case here - and the Center does solicit donations.

You can read about our prior 12 Days’ picks here:

12 Days of Charitable Giving: Forget Me Not

12 Days of Charitably Giving: Spirit Animal Sanctuary

Thanks to our guest judge, Elisa Jähner, for choosing Jamison Center. Elisa is a law clerk who occasionally blogs at Erblawg, a blog that may or not be connected to a certain taxgirl… Elisa, who is from Germany, says, “We have something similar in Berlin. It’s called the arch and is funded entirely by donations. I think this is a great charity.”

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Today marks the second day of my 12 Days of Charitable Giving. To recap, I’ve asked a panel of judges to review a number of deserving charities as suggested by my readers. I’ll be posting one a day for - well, 12 days (I’m clever that way).

I encourage you to check out the charities voted “most deserving” by my readers and judges. Remember that these are just suggestions and, in most cases, we can’t personally vouch for the good work that these folks do. So be smart. And be generous.

Today’s featured charity was submitted by Caroline. Caroline writes:

A search at irs.gov (which I highly recommend any time you are considering making a donation) reveals that DonorsChoose.org is on the IRS list of charitable organizations.

You can read about our prior 12 Days’ picks here:

12 Days of Charitable Giving: Forget Me Not

Thanks to our guest judge, Madeline Martin, for choosing Donors Choose. Madeline authors One Vote Matters, a non-partisan blog that focuses on the business side of politics. From the “business” of elections to how (where, when, why…) legislation and regulations influence different industries and individuals, One Vote Matters keeps you on top of what’s happening in the world of politics.

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Taxpayer asks:

While we were out shopping, I put a $20 in the Salvation Army kettle in front of the store. I say we can take that as a deduction but my husband says no. Who is right?

P.S. I have a new digital camera riding on your answer.

Taxgirl says:

Gosh. I hope your old digital camera is working just fine… The answer is that your husband is right.

The IRS changed a number of rules effective January 1, 2007, for charitable giving. One of the rules is that all charitable donations of cash (or cash equivalent), no matter what the amount, must be supported by written documentation. This means that checks and credit card sales are generally okay so long as you can clearly identify the donation portion. Cash is okay, too, but only if you can get a receipt.

Handing cash over to an organization without getting a receipt? Not deductible.

This isn’t to say that you shouldn’t do it. I gave my kids a couple of dollars to put in the red kettle the other day (and the bell ringer let them each give the bell a go, which they thought was awesome). If you’re inclined to support charitable causes like the Salvation Army and Alex’ Lemonade Stand that may ask for cash on the street, don’t let the lack of a tax deduction keep you from doing it. You might consider giving a dollar or two on the street and then going home and writing a check or making a donation online - that way, you get the immediate warm fuzzies for making a donation on the street AND you get the benefit of the tax deduction for your larger donation.

I had a similar question last year about making donations to churches for needy families - make sure you check it out.

Speaking of, the end of the tax year is rapidly approaching. You only have a few more weeks to make a donation to a qualified charitable organization in order to claim your federal tax deduction. Why not double your impact by telling us about your favorite charity? Leave a note in the comments at this prior post (click here) and the charity that you name may get an additional contribution.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the taxgirl!

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The end of the year is almost upon us and you know what that means: it’s your last chance to make your tax deductible charitable gift! Yeah, we tax people tend to think about the end of the year in slightly different ways…

This is a tough year for a lot of folks. Charities are reporting that donations are down and needs are up - not the best combination, as you can imagine. With this in mind, I wanted to do something to raise awareness for the great work that’s being done by a number of charitable organizations. At the same time, I wanted encourage you to make your charitable gifts by the end of the tax year (this is, after all, a tax blog).

So here’s what I’m doing: 12 Days of Charitable Giving!

I’m asking you, the reader, to post in the comments below about the charity that most deserves a boost this year - it needs to be one that you have supported financially over the past year or that you plan to support before the December 31 year end. At the very least, you’ll need to include the name of the charity, the city where the charity is located and why you support the charity (personal stories would be great). A link to the web site and the best way to make a donation would be terrific: the more information that you can provide, the better.

The charity must be a bona fide 501(c)(3) organization, meaning that deductions are tax deductible to the donor. Examples include churches, schools, libraries and purely public charities like the Red Cross. If you’re not sure about the tax status of the organization, you can check it out here. Additionally, most charitable organizations will post evidence of tax-exempt status on their web site.

Convince me why your favorite organization is a deserving charity. But you don’t have to convince just me: I’m reaching out to 12 bloggers and companies to evaluate the comments and choose the most compelling. Those bloggers and companies will commit to making a donation of at least $25 to the charity mentioned in the comments that they find most deserving. Even better, the winning choices will be featured, one per day, for 12 days in December on taxgirl.

The hope is that one donation (yours) turns into two (a match from the judges) or more (more readers), a big win for the charitable organization. The benefit to you? A tax deduction and some warm fuzzies, knowing that you’ve done something good in the world. Remember, the power of one can be enormous.

So, um, what are you waiting for? Start posting in the comments section below!

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I attended a great session at BlogHer today about online charitable fundraising and activism. Afterwards, one of the other attendees asked me why I was there.

Hmm.

Well, a lot of it was because I have interest on behalf of my nonprofit clients. Online charitable fundraising and activism is changing the face of the nonprofit world, though more slowly than I thought.

Another reason that I trekked over to see it was my hopefulness that b5media will continue to participate in charitable causes - our Blog Off was my first foray into online charitable fundraising. It was a great experience. The blogosphere offers tremendous opportunity to raise awareness and money in the nonprofit world - in the same way that for profit businesses have been doing for years.

But there’s still a lot of catching up to do.

So here are a few facts that were shared at today’s session that I found interesting:

According to Giving USA, there was $300 billion worth of charitable giving last year. Of that amount, 82% of dollars were given by individuals - I have to say that I was totally floored by that number. I expected to see a much lower percentage. It’s actually kind of amazing that the corporate giving is so low, don’t you think?

Of that number, approximately 1/3 of individual giving comes through faith based organizations like churches. That number, I expected to be higher.

Considering the $300 billion in charitable giving, only about 1% of that is from online giving. 1%! It’s about $2-3 billion.

The session ended with some commentary about why people give. Nonprofit orgs find that people will give for primarily three reasons:

1, Because someone asks (solicitations)
2, When there is a disaster
3, Tax deductions (donations tend to increase at the end of the tax year)

Tax policy at work? Of course. I’ve been mulling a little bit (the session was just a couple of hours ago) and I’m going to follow up on this later. For now, I’m just kind of digesting. 82% of charitable donations are made by individuals - and they cite tax deductions as a primary reason. Clearly, our tax policy is driving some donations. Just think how much more of an impact there might be with an above the line charitable donation (meaning not having to itemize)… More on this later.

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Taxpayer asks:
Hello,

My husband’s business gets letters from people asking for cash donations/sponsorships. Specifically, when students write to us asking for sponsorship for a People to People Ambassador program for their son/daughter to attend, or Cheer camp sponsorship for their cheerleading daughter to attend, or asking for a sponsorship for their child’s go-kart racing hobby at a local track, etc. Basically, I guess they are writing to us asking for cash to help pay for the expenses incurred in all of these endeavors.

I highly doubt that this type of thing would be a deduction for us on the business, but wanted to hear it from you.

Taxgirl says:

I’m right there with you! As business owners, we receive all kinds of solicitations for donations and sponsorships.

The easy answer first: Unless you’re making a contribution directly to a qualified charity, you cannot claim it as a charitable donation. Even if you give money directly to a sick person or build a home for a homeless person, it may be charitable in terms of the goodness of your heart but it is not deductible as a charitable donation.

But all is not lost. Unlike a personal gift which is not deductible, businesses have a second bite at the apple. If you can parlay that sponsorship into a promotion or advertising, you can make it deductible. For example, it could be the “taxgirl.com go-kart” with a paid sponsorship - now it’s deductible as advertising/promotion (which may be arguably better for you on your taxes anyway).

Of course, be smart. You can’t be ridiculous and the promotion must have some kind of logical connection to your business (it has to be seen, for example). But ads in event programs, tee shirts for kids’ soccer or football teams, all of those things can be used to promote your business - and you may be able to write off the cost, to boot!

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the Taxgirl!

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You probably think that I’m talking about the fact that for some disturbing reason, retailers have packed the stores with Christmas goodies - and Halloween isn’t even over yet (who buys stuff this early anyway?).

But I’m not.

I’m talking about solicitations. It’s the time of the year when charitable organizations come calling. So far this month, I’ve received more than ten charitable solicitations from tax exempt organizations: my daughter’s school, college, law school, the arboretum, PHS, the zoo, the art museum, public radio, public television and more. We’re sorting through all of them, trying to decide which ones to support. In addition, we’re plowing through piles of summer clothes since fall has finally decided to pay us a visit in the northeast… and putting them into piles: save, toss and donate.

Why the rush? Why now? Because you only have 62 days to incur additional charitable deductions for the calendar year 2007. Tax professionals know this. Charitable organizations know this. And now you do, too.

Charitable donations are a good way for many taxpayers to increase deductions and get a warm fuzzy or two in the process. Whether you donate cash or goods (like our used clothes and toys), you can take these deductions on your tax return - but only if you itemize.

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I know, I know. It’s August. Tax season is eons away. You don’t want to think about it.

But maybe you should. With some shrewd planning now, you can save thousands on your taxes come April. Consider these actions:

1. Refinance. Yes, the market is a mess right now. But there are still lenders willing to offer credit to homeowners so long as you qualify. And the interest on home mortgages is deductible. So, don’t run up your credit cards - that interest isn’t deductible (and don’t even get me started on the interest rates). Instead, consider refinancing.

2. Ask your employer about a health savings account (HSA). If you don’t purchase your own health insurance, chances are you don’t generally qualify for medical deductions. That’s because if you itemize (and only if you itemize), you are limited to deduct the amount by which your total medical care expenses exceed 7.5% of your adjusted gross income (AGI). Confused? Here’s an example. Say your AGI is $50,000 and your medical expenses are $5,000 for the year. Under the IRS formula, 7.5% of your AGI is $3,750. Even though your medical expenses were $5,000, you can only deduct $1,250 (medical expenses less 7.5% of your AGI). And if your expenses are less than $3,750, you get no deduction at all. Stinks, huh? But if your employer establishes a HSA, you can pay medical expenses out of pre-tax dollars that you contribute ahead of time. There are limits on your contributions (for 2007: $2,850 individual and $5,650 family) but in most cases, you still come out ahead.

3. Contribute to a 529 savings plan. In addition to the future tax savings for your children, many states (like Pennsylvania) offer a state income tax deduction if you contribute to a plan in that state. The best part? You don’t have to be the parent! Grandparents, aunts, uncles and friends are eligible to make contributions, too.

4. Top up your IRA. Deductions to individual retirement accounts (IRAs) are deductible above the line which means that you don’t have to itemize to take advantage of this strategy. And don’t forget your spouse: you can establish a spousal IRA even if your spouse doesn’t work. Check with your tax professional for information about limits and IRA options.

5. Do something good. In other words, make a donation. In order to take a charitable deduction donation for 2007, the donation must be made before December 31. But it seems that nobody has cash at the end of December. So, if you have a few dollars in your pocket now, think about giving them to the qualified charity of your choice. Be sure and get a receipt!

6. Buy a hybrid car. If you’re in the market for a new car, do it now. Manufacturers have sales limits that influence your donations - and the more popular cars are going fast. So, if you want to take advantage of the hybrid credit - which can be significant - don’t wait until it’s too late!

7. Improve your home. In addition to the increase in mortgage interest deduction if you finance the improvements via a home equity loan or refinance, there are additional tax credits for making energy-efficient improvements. New windows and appliances in your home now could mean more money in your pocket come tax time.

I’m as big a procrastinator as anyone, but there are some instances when it really does pay to plan. Give one or two a whirl - you’ll be glad come April that you did.

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