Today is a special day, especially precious to those facing serious challenges this year – it’s Giving Tuesday.
Giving Tuesday is apparently in its ninth year, as a reaction to the commercialization of the holiday season.
There are so many people struggling to stay in their homes; making decisions about eating – or feeding their children instead; many more are facing the same choice when it comes to their beloved pets, as well. And of course, so many people are dealing with COVID19 tests, illnesses and even deaths – sometimes it’s the breadwinner of the family who is gone. With all the recent storms, cold weather and other problems, we have new terms floating around, like “food challenged.”
If you can afford to help people in your community, please, be generous.
When it comes to the tax side of the donations, here are some tips and considerations.
- Money you give to people on the street or directly to someone in need is not deductible. And if you’re donating to GoFundMe-type appeals, look to see if they are directly for an individual, or handled through a non-profit organization (some are).
- Try to donate to charities that use your money to actually help people – rather than paying themselves ginormous wages and benefits.
You can actually see their spending by looking up the Form 990 that the charity files with the IRS each year, The reports are easy to find on the Charity Navigator website. https://www.charitynavigator.org/
- If you’re like many Americans, your standard deduction is so high that you cannot even itemize. So you’re not going to get a deduction for your contributions. What can you do instead?
- Give the money to a relative or friend who IS itemizing and let them make the donations. If you want recognition for the donation – they can donate in your honor.
- If you like making large donations, consider making two years’ or more worth of donations now, so you have enough to itemize your deductions. You can actually do that a couple of ways:
- Naturally, you can simply donate to your favorite organizations directly.
- Consider opening a Donor-Advised Fund (DAF) with your favorite financial institution. That let’s you make extremely substantial donations to your DAF right now – but gives you time to distribute the money to your various, favorite charities.
- For seniors, age 70.5 or older, there is a special way to make donations directly from your retirement accounts. It’s called a Qualified Charitable Distribution (QCD) – and allows you to transfer up to $100,000 directly from your retirement account to charity without paying any tax on the distribution at all. The benefit is that this distribution won’t increase your adjusted gross income, potentially causing your Social Security benefits to become taxable. This is ideal for folks who like to donate $10,000 or so to their churches, mosques, synagogues, temples, etc. Incidentally, this distribution would also qualify for the Required Minimum Distribution (RMD) in years when they are required. (All requirements are waived for 2020 – but that doesn’t mean you may not take RMDs.)
- Receipts – please be sure to get written receipts for all donations of $250 or more to any organization – before you file your tax return This is very important if you want the deduction.
Folks who cannot get any tax breaks for your donations – it still might make you feel good if you can help someone who’s worse off than you this year. While your donation might not be in the form of money or something tangible, even babysitting, or grocery shopping or running errands for someone can still be so valuable. Sometimes, even just a phone call or a hug is enough (if it’s safe to touch someone). (That means I need to start making calls to my family today, too, right?)
And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion
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