They say it’s better to give than to receive. That’s very true, especially when it comes to charity. Being able to put a part of your money to use by helping to make the world a better place is a wonderful and noble thing to do. But if you can give AND receive- That’s the best of both worlds.
Charitable donations won’t just make the world a better world. They’ll put your pocketbook in a better place! If you’re wondering how charitable donations can help you save money, let Hacker Accounting show you how.
You Can Deduct Them
A gift to a qualified charitable organization could very well entitle you to a charitable contribution deduction against your income tax! First off you’ll need to make sure that you itemize your deductions. If the gift you’re giving to the charity is deductible, you’ll be able to reduce the actual cost of your donation. And here’s the kicker: As your income tax bracket increases, the cost of your charitable gift decreases! The more you can afford to give, the more you’ll be rewarded for doing so.
An important thing to remember. Your contribution is deductible in the year in which it is paid. A contribution that’s made on a credit card is deductible in the year it’s charged to your card, and contributions paid by check are dated by when they’re put in the mail. Keep these things in mind, because if your credit card company ends up charging you on a later date that won’t count as the date of your deductible. The same thing applies to checks. The year in which you file is the year you dropped the check in the mail, NOT the year that the organizations cashed it.
Types of Organizations You Can Donate To
There are all sorts of worthy nonprofits, altruistic agencies and other organizations that you can make a charitable contribution to. So long as you donate to one of these seven types of organization, you should be to make a deduction.
- Tax exempt educational organizations
- Churches and other religious organizations
- Tax exempt hospitals and medical research organizations
- A government unit
- Publicly supported organizations
- A private operating foundation that pools all of its donations into a common fund
- Private foundations that distribute all contributions they receive to public charities within two-and-a-half months after the end
- of that foundation’s fiscal year
Who Can’t I Donate To?
Always talk to your accountant to make sure that you’re making a charitable donation to the right kind of organization. While being altruistic and charitable should be its own reward, there’s no sense in generously giving without any reward just because you didn’t ask the right questions. The rule of thumb is the organization’s base of operations. If they are a foreign government or foreign charity, your donation will NOT be deductible.
Got more questions about how charitable donations can help YOU save money? Give Hacker Accounting a call at 602-375-5251.