How Donating to Charity Can Give Back
Why is it that we feel more charitable around the holidays? Maybe it's the eggnog getting to our heads, but holiday time is a huge season for making strangers feel warm and special. According to the National Center for Charitable Statistics, Giving USA 2015 estimated the 2014 figure for individual giving at $258.51 billion, which was a 7.1% increase from that of the year prior. Maybe it's all the horrible news that keeps bombarding our screens. But donating to charity is not just a generous way to spend your extra cash around the holiday season: there's a way that charity can give back, too.
According to Charity Navigator, when you make a donation to an eligible charity, you can save on taxes. For example, the higher your tax bracket, the lower the actual cost of your donation, considering your tax savings. For example, if you're in a 33% tax bracket and donate $100 to a charity, that means you're only actually paying $67 when you take your $33 tax savings into account. The higher your tax bracket, the more tax savings you will have. So, it pays to be wealthy!
Another benefit you may not know about your donation to a qualified charity, is that it's deductible within the year, even if you make a payment on credit that is not made until the following year. Most charitable organizations also qualify for a charitable contribution deduction, including religious organizations, educational organizations, hospitals, government units, and more.
But people assume incorrectly when they think only monetary donations can give them tax breaks. Even if you're not donating money, you can still be recognized for deductions for clothing and household items in "good condition or better." These will be taken into consideration at their value.
But one important caveat: you must always remember your documentation, even for non-monetary donations. If you donate clothes to Goodwill, for example, always get a receipt. In case you are audited, you must have a canceled check, credit card statement, or a written verification statement from the charity including its name, the date of donation, and amount donated. Even if you donate some dollars into a bucket, without a receipt, you won't be able to use that as a charitable deduction.