Tax Benefits of Charitable Giving

By Wiss Associate

As the new year is set in motion and you tuck away holiday presents, you may have stumbled upon items that you rarely ever use. Instead of finding additional space for these objects, it can prove to be more beneficial—and profitable—to donate them! If you break down your deductions, a contribution to an eligible philanthropic group can award you a charitable contribution deduction against your income tax.  Normally, you can subtract up to half of your adjusted gross income, but in a handful of cases, 20 or 30 percent limitations can apply.

Consistent with the IRS, these organizations are categorized by their objectives and functional structure. Each one is required to register with the revenue service. The following are charitable organizations which you can donate to:

• A community corporation, chest, fund, trust, or foundation, crafted within the United States that operates entirely for religious, scientific, charitable, or any other purpose.
• Temples, churches, mosques, or any other religious affiliation
• A state or a political subdivision of a state
• Private foundations that allocate their offerings to public charities or a common fund
• A war veterans’ group or its “post, auxiliary, trust, or foundation” prearranged in the United States
• A not-for-profit cemetery establishment, only if funds are used to upkeep the cemetery and not a specific crypt or section
• A not-for-profit volunteer fire organization
• A domestic fraternal society, only if funds are used strictly for charitable purposes

Remember, contributions can only be deductible if they are offered in cash or other property prior to the completion of your tax year. Additionally, the contribution can only be deducted if you have printed acknowledgement from the organization itself. If you are audited and do not have written substantiation or proof of the exchange, the deduction could be disallowed. To verify if the organization you wish you donate is truly a nonprofit, read through the Exempt Organization Select Check on IRS.gov.

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If you would like more information on this topic, contact us today at 973-994-9400 or at hello@wiss.visioncreativegroup.com.

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