Charitable giving: how it affects you financially as well as personally

Published on

The holiday season is just around the corner and many charitable organizations are in desperate need of donations to help provide the vital services needed in the community. You are most often inundated with a number of charitable requests towards the end of the year, which could be ideal time to take advantage of charitable giving from a financial standpoint.

Charitable giving and taxes

For many people, charitable giving provides them with either a tax break or a deduction depending on the type of giving. When you use your charitable giving for a tax deduction, you often will lower your overall taxable income, sometimes even dropping yourself into a lower tax bracket. How your deduction works will depend on the type of qualified charity, how your donation is structured, and the form that the donation takes.

Types of donations

When you make a cash donation to a charity, the exact amount donated will be the amount that is fully deductible. Always remember to get a receipt if the cash donation is more than $250. If you choose to make a donation of a tangible asset, then you will likely be able to deduct the full amount of the item based on what they would currently be worth. In the event that you donate an asset not directly linked to the charity's mission, you will be able to deduct the lesser of what you paid, or what the item's reasonable value is.

While volunteering is a great way to donate to a charitable cause, you will not be able to use your time spent volunteering as a deduction. But you are allowed to deduct the costs of transportation or other expenses associated with your volunteer work.

Understand the guidelines

The IRS sets very specific guidelines for allowing a charitable donation to be tax-deductible, so it is vital to know the limitations to prevent problems with your tax return. It is also important to remember that any donation of $250 from one charity will need to be accompanied by a statement from the charity that lists the amount of the deduction, what was deducted, and whether any goods were exchanged for the gift, which could reduce the deductible value.

Charitable giving not only provides you with a financial benefit but also provides you with comfort knowing that you were able to assist your favorite organization in their projects for the upcoming year. While the financial aspect may help you during tax season, the personal reward you will receive will stay with you all year long.

 

Important disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Sources

https://www.thebalance.com/how-charitable-giving-can-impact-your-taxes-1289751

Content Provider: WriterAccess

LPL Tracking 01-05056775

You may also like

article

I know your password!

Truth be told, I do not. However, it appears I, and many others, could guess! In previous blogs, I have talked about the importance of protecting your PC from cyber theft and the potential threats of malicious software that steals your password and…

article

A financial travel checklist

You’ve placed your liquids, gels and aerosols into a single, quart-size, zip-top, clear plastic bag. You’ve packed your swimsuit and are ready to go on that long…

article

Traveling? Know before you go

Nothing can take the joy out of traveling like traffic, flight delays, crowds, and costs. Many times, it’s so stressful that you need a vacation from your vacation! While we can’t control most of those factors, there are a few ways to help ease the…

General Disclosures

The opinions and views in this blog post are those of the authors, and are not intended to provide specific advice or recommendations for any individual. Please consult professional advisors with regard to your individual situation.

Disclosures

Securities and insurance offered through LPL or its affiliates are:

Not Insured by FDIC or Any Other Government Agency

Not Bank Guaranteed

Not Bank Deposits or Obligations

May Lose Value

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Webster Bank and Webster Investments are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Webster Investments, and may also be employees of Webster Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Webster Bank or Webster Investments.

The LPL Financial registered representatives associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.

The Webster Symbol is a registered trademark in the U.S.