Giving Tuesday is right around the corner. On December 3, many will do good in their community or worldwide, as they give to charity organizations across the nation. If you expect to share the love, here are a few ways to take tax advantage of Giving Tuesday.
First, what is Giving Tuesday?
Giving Tuesday was founded in 2012 to inspire others to do good. In the past seven years, it has grown into a worldwide effort to encourage giving and generosity. In 2018, approximately 3.6 million people participated worldwide, across more than 150 countries, giving more than $400 million dollars in gifts. The average online gift amount was $106 per gift.
Use your gifts as tax deductions
Donations made to tax exempt organizations could equate to a taxable donation at tax time. Therefore, it is important to save your tax receipts. Keep in mind, in order to take advantage of the tax donation – you must itemized your deductions – which means you must have more deductions than the standard deduction. For single individuals, the standard deduction is $12,000, head of household $18,000 and $24,000 for married filing joint taxpayers.
Consider bunching your donations
If obtaining a tax deduction is important to you, consider bunching your tax donations. For instance, if you plan to give $7,000 this year and do not have enough to itemize, consider making two donations in the following year after Jan 1. This increases your chance to itemize and provides a higher tax deduction at tax time.
Save your cash and consider appreciated assets
If you are on the fence about shelving out your cash, consider giving appreciated assets instead. Assets such as stocks, art and other appreciated items are great to donate because they provide two major benefits. First, the amount of your donation is the fair market value at the date of the gift. Thus, a stock you purchased originally for $50 that has grown to $500 would equate to a gift of $500 to your favorite charity.
Next, another great benefit is the elimination of capital gains. If you were to sell the stock, you would be subject to capital gains, which can be as high as 20%. Therefore eliminating the sale of the asset generates a higher tax deduction.
Lastly, be careful where and whom you give your money to. Verify the website you are using is legitimate and safe. Also, check with IRS to ensure your organization is tax exempt.
Kemberley Washington, CPA is a best seller author, news contributor and owner of Washington CPA Services, LLC. She contributes to her blog Kemberley.com and 21daysof.com.