The end of the year is a perfect time to give back to others and your community. Whether you’re an individual or a business owner, charitable donations benefit the recipient and provide tax advantages to the donor. Tax deductibility often incentivizes individuals and corporations to give more vigorously to philanthropy, which is essential. Here are some reasons why end-of-year giving may be a comprehensive strategy.
To help manage the current year’s tax liability.
Year-end donations and tax savings have the added advantage of allowing you to manage your tax liability for the current year if made by December 31st. Donations made by checks or credit cards must clear the donor’s control, whether delivered or mailed, by the deadline.
To end the year positively by doing good for others.
Moreover, year-end donations significantly impact communities in need and reduce your tax liabilities. Donors fuel efforts that bring about societal improvement and community development by channeling resources toward targeted areas such as education, healthcare, poverty alleviation, environmental preservation, and many others. Giving helps create a more equitable society—a win-win situation for all parties involved.
Tips to help you get the most from your donation
#1- Validate the charity is IRS-qualified.
In making year-end donations and tax savings, it’s crucial to ensure the charity or non-profit organization you’re donating to is recognized by the IRS as qualified. To be qualified, the organization must operate exclusively for charitable, religious, educational, scientific, or literary purposes. The IRS website provides a comprehensive list of recognized charities, and tools like the IRS’s Tax-Exempt Organization Search can help verify an organization’s status before you donate.
#2- Keep detailed donation information.
You must keep detailed records of all donations to claim your tax deductions. For any contribution made, request a receipt with the charity’s name, the donation date, and the amount given. Meanwhile, depending on the value of your donations, different types of records and procedures may be required.
In conclusion, as we approach the end of the year, consider making charitable donations and tax savings that can help lower your taxes and positively impact your community. Remember to conduct adequate research to help ensure that your chosen charity qualifies for tax deductions and maintain thorough records for tax filing purposes.
SWG3878283-0924B Disclosure: This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.
In addition, at Centennial Wealth Strategists we know whether you are planning on growing your retirement assets or protecting them for your family, we will take the time to get to know you to help ensure that you’re equipped with a plan that’s tailored to your unique situation. With Centennial Wealth Strategists, you get the benefit of veteran advisors and technology working for you. It’s the best of both worlds. Contact us today to schedule an introductory meeting.