You love giving to others, but sometimes just don’t have the cash to share with your favorite charities. Instead of feeling guilty for skipping out on a donation, why not try these five ways you can still give to non-profits and receive charitable tax deductions.
Donate Stock
I’m sure you’ve donated food and clothing to a charity before, but did you know that you can also donate stock? Instead of selling appreciated stock and giving the earnings to a charitable organization, avoid losing money on taxes by donating the stock itself.
As non-profits don’t have to pay capital gains tax, through gifting an appreciated stock to a charity, the entire value will be preserved while you avoid having to pay extra on taxes!
Open a Donor-Advised Fund
If you want to give to multiple charities or don’t have a specific amount in mind, opening a Donor-Advised Fund (DAF) is a great way to always have money set aside for your donations and get tax deductions that same year. Simply choose a DAF sponsor, invest in one of their many pre-approved options, and then submit a grant request when you’re ready to donate the money!
Like all investments, however, there is risk involved as the value of your DAF can rise or fall with the economy – which is why it’s often smarter to invest in low-risk opportunities if you’re planning to withdraw the money sooner rather than later, or vice versa.
Create a Charity Budget
As the needs of a non-profit are year-round, treating charitable donations like any other expense and budgeting them out accordingly can not only help support your favorite organization on a regular basis, but can also increase your yearly giving – thereby your yearly tax deductions.
And don’t forget to keep a record of all donations – whether cash, physical items, or otherwise – for later ease of tax documentation!
Narrow Your Options
While it can feel good to help as many organizations as possible, sometimes the most impact can be made by consolidating your funds into only a select few charities. This way, you’re still spending the same amount, but can have the pleasure of seeing the donation go to better use than if you had stuck with the original fraction. Tracking contributions for income taxes is also made easier!
Want to make even more of an impact? Why not consider volunteering your time and getting involved with the non-profit’s mission?
Aim for Itemized Tax Deductions
If you’re close to the standard deduction threshold ($12,000 for singles, $24,000 for married couples), why not consider doubling your charitable donations for that year? Chances are you’ll receive a greater tax deduction by itemizing, while also maximizing your giving to non-profits struggling to survive under the new Tax Cuts and Jobs Act.
Worried your donation won’t process in time for that tax year? Open a DAF to receive an immediate deduction – regardless of when the charity receives your contribution.
(Thanks to this article by Deborah Meyer for the research!)
