It’s always nice to donate to charities or organizations that are near and dear to your heart, but it makes the situation even better when you can claim those donations on your tax return. You will be allowed to write off the cash value of charitable donations to tax-exempt organizations if you itemize the deductions on your return. By donating to charity or organizations that you support, you can lower your taxable income.
Donor-Advised Fund (DAF)
One of the best ways to maximize the value of charitable contributions is by opening a DAF. This allows donors to put a sum of money in it for future donations. The donations from the fund are tax deductible and do not have to be issued in a required timeframe. The initial contribution must be $5,000 and additional ones can be made to the fund. A DAF allows people to lower their taxable income now for donations that will be made in the future.
What are some 501(c)(3) organizations?
If you are looking to lower your taxable income by maximizing the value of your charitable contributions, you should know which organizations are tax-exempt. They need to hold 501(c)(3) status. Some organizations include:
- Non Profit medical centers and hospitals
- Churches, mosques and synagogues
- Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America
- Salvation Army, United Way and Goodwill
- Zoos, museums, colleges and schools
Deduction Amount is Limited
The amount of charitable contributions individuals can deduct on your taxes is limited to 50 percent of your adjusted gross income. So, if you made $70,000 last year, you can only deduct $35,000 in charitable contributions. If you wrote a check or donated cash to an organization, you can typically deduct the full amount. Deductions are accepted for expenses incurred while volunteering, property donations and monetary donations.
Tobin & Collins has been providing the New Jersey and Metropolitan New York area expert advice for more than 40 years. Contact their friendly staff today to discuss how you can maximize the value of your charitable contributions this year.
