End-of-Year Charitable Giving

​As both the holidays and end of year get closer, it always seems that requests for charitable donations increase. Be it the Salvation Army Santa outside of the grocery store or a call from your favorite charity that you give to annually, there is a push for giving in the last few weeks of the year. This is most likely attributed to the fact that we are more inclined to help those less fortunate and causes we care about during the holiday season.

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In addition to feeling good about helping others, this year-end generosity can pay off months later at tax time if you follow Internal Revenue Service rules on tax deductions. Below are a few tips to help turn these donations into tax savings:

Itemizing is Required
No matter the amount you give, your charitable gifts will not help your tax situation if you claim the standard deduction amount on your tax return. You must itemize expenses on Schedule A to deduct charitable donations. However, in most cases, there is no limit on how much you can deduct.

Timing is Everything
Donations must be made by the end of the tax year for which you want to claim the deduction. For example, if you put a check dated December 31, 2015 in the mail on that day, it will count toward your 2015 taxes. Mail containing a donation must be postmarked by the last day of the year to count for that year, regardless of when it is received. The same applies to donations made on a credit card. As long as it is charged by the last day of the year, it doesn’t matter that you might not pay it until the following month.

Know the Tax Status
Research your charity of choice to ensure it is a tax-exempt organization. Only contributions to IRS-qualified charities—those with 501(c)(3) status—are deductible. Feel free to ask the charity that you plan to give to for its tax status. Any reputable organization will be happy to share this information and offer proof. Another option is to use the searchable database of exempt organizations found on the IRS website.

Now that you know the guidelines to deduct your donation for tax purposes, here comes the fun part—picking your charity. With all of the charitable organizations that exist today, you need to be smart to ensure your hard-earned money will make an impact. Below are tips to help you select and feel good about where your money is going and how it will be spent.

Narrow Your Focus
Experts advise that it’s more impactful to donate what you can to one or two organizations, instead of spreading it among 20 organizations. Think about the cause that most touches you and research related charities to help find the right one for you. Keep in mind that you can switch it up every year, or every few months, depending on what your budget allows.

Give to Reputable Groups You Know
If you have volunteered at an organization or are otherwise familiar with the work it does, that’s always a safe bet. Particularly if the mission is important to you, you’ll be able to donate with confidence. While you may give to an organization you know this year, take time before next year-end to learn about other organizations that interest you. Being reluctant to give to strangers is natural. Wherever you give, be educated about it first.

Let the Internet Help
There are a handful of websites that provide in-depth information about charities. Using these is a good place to start your research. Try www.charitynavigator.org, www.charitywatch.org or www.give.org (the Better Business Bureaus’ Wise Giving Alliance). While religious organizations aren’t typically required to publicly disclose how they spend donated money, many do reveal this information to the Evangelical Council for Financial Accountability—www.ecfa.org—so check this site as well.

Don’t be Fooled
Often times, a fake charity will have a name very similar to a well-known one so make sure you’re donating to the correct organization.

Protect Yourself
Lastly, remember to protect your identify. Scam artists will also take advantage of the season of goodwill to steal your money or worse, your identity. Never give out credit card or personal information in response to phone, email or door-to-door solicitations. Ask for the charity’s website so you can donate that way or a mailing address where you can send a check. Also, don’t ever give anyone cash. There’s no way to guarantee where it will end up.

Happy giving!

This information is provided with the understanding that the association is not engaged in rendering specific legal, accounting or other professional services. If specific expert assistance is required, the services of a competent, professional person should be sought.

Provided as a public service by the Pennsylvania Association of Community Bankers.