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Last Chance for Charitable Donations

’Tis the season for giving. If you’ve thought about giving to a nonprofit or charity, the end of the year is the perfect opportunity to reap an extra bonus. Donate before December 31, and along with the joy of giving, you can reap a financial reward in the form of a tax break.
Group of people volunteering to give out meals

Choose a charity

The first step in making a donation is to decide on a charity. In order to narrow it down, think about one or two causes that really matter to you. If you feel passionate about the cause you’re supporting, you’ll reap more satisfaction from making the donation.

You’ll also want to ensure that it is a qualified nonprofit organization by IRS standards—you can’t deduct donations to individuals or to political campaigns, no matter how strongly you support them. Also, you’ll want to check online charity watchdog sites like charitynavigator.org that rank charities on how accountable, transparent, and efficient they are with your money, to make sure your donation won’t go to waste.

Budget an amount

Once you’ve determined where you’ll give, you need to decide how much to give. While most charities are grateful for monthly pledges, you may want to donate a lump sum before the year ends in order to take advantage of the tax deduction. The amount you give is a personal decision, so weigh it carefully based on your own finances, goals, and values. As long as you can still pay your bills, feel free to be as generous as you feel inclined to be. Just make sure to document your generosity by getting a receipt.

Get the best tax deduction

Filing taxes requires a lot of paperwork, and getting a tax deduction is no exception. If you want to write off your charitable donation, you need to be able to prove what you gave and where you gave it. Many charities will send you a statement, but if they don’t, a bank statement showing a withdrawal with the organization’s name will usually work. If you donate items, such as clothing or household goods, get a receipt and fill in the estimated value of the donated goods.

Another important note is that in order to deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. To make those donations count, you’ll need to file the longer form that lists out specific items, including your charitable donations.

More reasons to give

Of course, tax breaks aren’t the only reason to contribute to a charity. When you give to a charity you believe in, you’ll reap emotional rewards of knowing you helped further the cause. The money or items you share will be appreciated by others who are affected by your generosity. Yes, there might be a little something extra for you when your tax refund comes in, but, more important, by making a charitable contribution, you’re doing something to make the world a better place.

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