It’s almost year-end, which means that people are starting to think about charitable giving. So as you reach for your wallet, here are a couple of important things you should keep in mind:
Don’t Give for the Write Off
Under the current tax code, you can take charitable contributions as an itemized deduction, which will reduce your overall tax bill. But 100% of the time, you are better off financially if you just keep your money. In other words, you will never come out ahead if you spend a dollar to save fifty cents. So if you are giving money away for “tax purposes,” you don’t understand how money works.
But Do Give
However, just because the math doesn’t work out in your favor doesn’t mean that you shouldn’t give at all. Charitable giving forms the foundation of any healthy community and connects people in a way that otherwise wouldn’t exist. It’s responsible for projects as renowned as Carnegie Hall and as personal as your community garden.
If you have been blessed financially, then pick one to three charities that resonate with you personally and give them your full support. Don’t spread your generosity buckshot-style between 100 different organizations. Invest in what’s important to you—your church, a local organization that does a lot for the community, or an international organization that focuses on an issue that really matters to you.
And Get Documentation
If you do decide to give financial support to a charitable organization, then you should absolutely make sure you get the tax benefits. Accordingly, make sure that you receive written acknowledgement from the organization that includes:
- date of the contribution,
- amount of the contribution, and
- verification that no goods or services were received in consideration for the contribution
Also make sure you receive this letter before you file your return. Otherwise, your charitable deduction may be disallowed by the IRS.
Josh Norris is an Investment Advisory Representative of LeFleur Financial. Josh can be reached at josh@LeFleurFinancial.com.