Make Your Charitable Contributions Before Year End
Both 2008 and 2009 have been hard years for charities, at the same time that more and more individuals are seeking charitable help for the first time. Let’s face it; even those of us with jobs have found ourselves scrimping more, perhaps running out of money at the end of the month, or cutting back on luxury items that used to be a mainstay in our households. Maybe this year there has been a salary freeze at your job, or you will not be receiving a bonus that you count on to balance your excel sheets (think Clark Griswald when he found out his boss had suspended Christmas bonuses and goes crazy in National Lampoon’s Christmas Vacation).
Basically, there are two reasons to give to charities: the first is because you would like a tax break. Why give Uncle Sam money when you could instead give some of that money to a charity that supports or helps a cause of your choice? The second is because you genuinely want to help out a cause. Either way will yield you tax savings, and help the growing deficit charities are facing. Here is some information to help you navigate the process.
Calculate your Tax Savings for Extra Motivation
Figuring out your tax savings is simple. Check out this chart to find out what your income tax bracket is for 2009. Each dollar that you contribute (either in cash or in market value of goods donated) will yield you a tax savings of your income tax bracket. For example, if you are in the 25% income tax bracket, then your tax savings is 25% of your contribution amount (for $100, that would be $25 in tax savings).
Timing: Deadline is December 31, 2009
Tax deductions may be made in the tax year that the actual money or goods were donated. So you have until December 31, 2009 to take advantage of tax deductions for this year. If you want to donate money, but do not have it right now, then you can charge that money on your credit card (be responsible; I hope that if you do this it means you have the money next month to pay off your balance in full), and you can still take the donated money as a tax contribution in this year.
Clean Out Your Closets
This is a great cleansing experience. Get out the old, and make room and space for new in your life. Prioritize by choosing what you truly need and use, over what perhaps no longer represents who you are, or was purchased on a consumer binge, or no longer fits (even though you wish it would!) Clean out your closets, your children’s closets, your garage, etc. Make sure whatever you donate is in good or excellent condition, otherwise, the IRS does not allow you to take a tax deduction (and other families or organizations will most likely not be able to use the item).
Choose a Charity
Is there a particular cause you are interested in, or that has some meaning to you? It is best to research organizations and make sure that they are eligible to receive tax-deductible charitable contributions by doing a search on the IRS website (you do not receive a tax deduction if you donate to a charity without this designation) and also to make sure that most of the donated money is spent on the core mission of the organization. Charity Navigator is a great, free tool to look up charities and find out what their rating and statistics are in terms of efficiency in spending money for their mission and fundraising.
Make the Donation and Get a Receipt
The IRS has become more stringent in recent years about documenting the donations that you make, both monetary donations as well as items donated. For example, if you donate an item that is valued at more than $500, or if the sum of all of your items donated are valued at $500, then you need to submit Form 8283. You will see on the form that any one item donated at a value of over $500 will need an official appraisal. You also need to get a receipt for any items donated, or risk being questioned and owing the IRS money if you have an audit one day.
I missed out last year on cleaning out my closest and vowed not to miss the boat again this year. I packed 5 BIG plastic garbage bags full of clothes I no longer need or use. My whole agenda lately has been not only spending less and saving, but wasting and using less “stuff” in general. Donating the clothes was a good way to save a little on my taxes and also free up some much needed space in my one bedroom apartment.
It to the good will in time for a 2009 tax deduction. =) I love your reading about your dollar plans… Good Stuff !
Charitable contributions actually do not yield you a tax deduction at all unless you itemize deductions on your return. If you do not have enough to itemize, you will get the standard deduction regardless of how much you donated.
For 2013, single taxpayers get a standard deduction of $6,100, and married filing jointly get $12,200. So the only way that charitable contributions will give you any sort of tax deduction at all is if you donate beyond those amounts or have other itemized deductions that will exceed those amounts. Otherwise it’s just a kind contribution.