Whatever your reason for giving, think of different ways you can have an impact on the causes you care about.
If you plan to itemize deductions on your federal tax return, charitable donations can be an effective way to lower your overall tax bill. But even when there’s no tax benefit, donating money or volunteering time helps you put the wealth you’ve earned to work toward worthy causes or to improve the lives of people in your community.
Donating money and other financial assets. Making donations of cash is straightforward—the full amount of your monetary donation is tax deductible if you’re itemizing deductions this tax year. Be sure to get receipts for all your cash donations for tax reporting purposes.
If you donate securities such as shares of stock, you may use the full fair market value of these securities as a tax deduction, as long as you’ve held the securities for more than a year and the deductible amount doesn’t exceed 30 percent of your adjusted gross income. Also, you won’t incur capital gain taxes when you donate securities.
Employer matching opportunities. These days, many companies are using employer matching donations as a way to stay in touch with their local communities and build employee engagement. If your employer offers a matching donation program, it can be a great way to extend the impact of your charitable contributions.
Donor-advised funds. As an alternative to setting up a foundation to manage charitable contributions, donor-advised funds are an easy and cost-effective way to support causes you care about. With these charitable giving accounts, money you contribute is managed by a sponsoring organization, but you still control where to direct your donations and how much to give. In addition, your donations may still qualify as tax deductions.
Giving physical assets. Many charitable organizations accept donations of clothing, furniture, appliances and other household items. In many cases, you can take the fair market value of these donations as tax deductions if you are itemizing this year. You may also be able to donate cars, boats, motorcycles and other large vehicles. Before you donate a car, do your homework on the charitable organization to make sure they’re legitimate and know the rules about deducting the proceeds from the sale.
Volunteering your time. There’s no tax benefit to volunteering for a favorite cause or charity, but it’s still a great way to show your support and participate in a community activity. Volunteer work is suitable for anyone at any age—teens can start to build work experience through charity work, adults can mingle in a network of like-minded people, and retirees can find ways to stay busy and social with others in their communities.
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