The Thanksgiving holiday is a time to stop and really notice how much we have to be thankful for. Many people take that gratitude a step further by sharing from what we have; they take their “thanks” and turn it toward “giving” to worthy charities this time of year. The arrival of “Giving Tuesday” next week also prompts people to give.
An article from the Iowa Attorney General’s office this week (see item 5 in the article) reminds us of steps to ensure we give wisely. Careless gifts may end up in the hands of criminals OR of organizations that do not use funds wisely. One way to make sure your money is used well for the cause you care about is to give to a local organization that has a good reputation. When giving to national organizations, you can make sure they are well-managed by checking one or more of these reputable charity rating sites: BBB Wise Giving Alliance, Charity Navigator, CharityWatch, and GuideStar. The article offers more suggestions as well.
Another way to give wisely is to take the tax deduction for which you are eligible! Some people may say, “I don’t give to charity just for tax purposes – I give because I care!” That’s great. But if you take the tax deduction, and it reduces your tax bill (or increases your refund), then you have MORE money to give! Now that is wise giving!
The tax code allows us to deduct (subtract) our charitable gifts from our income before the tax is calculated. The government created that deduction to encourage us to give. By taking the deduction, and potentially having more to give, we are contributing to the valuable American habit of supporting worthwhile causes. There are two ways to deduct your charitable contributions:
- By “Itemizing” your deductions on Schedule A of your tax return. This is great for people who have enough deductions to be higher than the “standard” deduction allowed according to family type. For a single individual, that standard deduction is $12,550; for a married couple, it’s $25,100. Your tax preparer can help you know if this is advantageous for you.
Good news! Even if you are better off with the standard deduction, a new law lets you deduct some 2021 giving anyway!
- Thanks to some of the COVID-relief legislation passed in 2020 and 2021, taxpayers can take a deduction for charitable contributions in 2021 even if they don’t itemize deductions! An individual tax filer can deduct up to $300 of monetary contributions to qualifying charities; for married couples filing jointly, that figure is $600.
In the midst of your Thanksgiving celebration, I encourage you to think about any charitable giving you might want to do, and then when you make the gift(s), be sure to keep the receipt for tax purposes! Plan now for #GivingTuesday and beyond!