What You Should Know Before Giving To Charity
Despite the mortgage crisis and high gas prices, charitable giving in the United States reached a record of an estimated $306.39 billion last year.
That is a contribution increase of 3.9%, which is a good sign for charitable organizations hurting for money. For the past year, many non-profit organizations have seen overhead increase as a result of increased food and gas prices. Even so, this is the first time charitable giving exceeded $300 billion, according to the Giving USA Foundation, a philanthropy and research company.
So thinking of giving? Charitable giving might also benefit you the giver. How? Well, if you make a donation to a 501(c)(3) organization, then your contribution is tax deductible. The tax season for 2007 may have passed, but there’s still around six months to give for next year’s deductions. Of course, it’s important to know that when giving money or making a noncash donations, “that the organization must have a charitable intent for donations to be tax deductible,” says Michael Eisenberg, a CPA-PFS for Eisenberg Financial Advisors in Los Angeles, Calif.
After finding the right cause, remember: The IRS requests that charitable write offs include documentation. So if you’re planning on making a charitable contribution, make sure to obtain a receipt or other documentation for record keeping purposes, even for small donations. If you’re giving $5 cash each week in your house of worship, your donations cannot be claimed at the end of the year without a receipt. Even if you’re dropping off clothes to the Goodwill, you must get a receipt back from the organization indicating your donation, and every item has to be identified with a value. (For items more than $5,000, there must be a more formal appraisal process.) The IRS allows you to deduct 50% of your adjustable income –although in some cases there may be limits of 20% to 30%. Organizations should be “sending you a letter,” by way of record, says Eisenberg.
Via: MainStreet
