Everyone Benefits When You Make Charitable Gifts
Now that we are in the heart of the holiday season, you may be thinking about ways you can put your money where your heart is. Specifically, you might be pondering which groups you should support with charitable gifts. And as long as you choose groups that meet the right criteria, your generosity can also be rewarding to you, in the form of tax benefits.
To begin with, you’ll want to make sure you are giving to a reputable charity. That means you’ll need to ask some questions. How does a group measure its effectiveness? Is it devoting as much of its contributions as possible to the actual work of the organization, or is it spending too much money on administrative costs? Generally, a worthwhile charity should spend at least 75% of its income on programs. You may be able to find this type of information on a charitable group’s annual report and its website. You can also go to the website of one of the agencies that evaluates charitable groups. On these sites, you can get a lot of information dealing with a charity’s effectiveness, income, spending and other topics.
After you’ve identified a charity, or charities, you can decide how much you want to give and how you want to give it. If the charity has 501(c)(3) status (named after the section of the Internal Revenue Code that governs such groups), your gift can offer you a tax deduction. So, for example, if you are in the 25% tax bracket, and you give $1,000 to a qualified charity, you can subtract the $1,000 from your adjusted gross income, which will result in tax savings of $250. Upon making your gift, make sure you get a receipt that lists the name of the organization and the date and amount of your contribution. (Your maximum deduction will be limited to a percentage of your adjusted gross income…
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