It’s the most wonderful time of the year! In this season of giving, we’re bringing you our annual charitable contribution tips. How can you make your giving stretch and how can you ensure it goes to those who need it most? Let’s take a look.
Consider bunching your charitable giving. With the standard tax deduction threshold set at an all-time high, you may want to consider bunching your charitable giving into select years. One way to do that while still earmarking funds for the nonprofits that rely on your annual support is through donor-advised funds (DAFs). DAFs can be great tools for those who need to offset capital gains in certain years as well. Plus, the funds can grow tax-free while you distribute them over time. Learn more about DAFs here.
Understand what’s deductible. Not all charitable causes are deductible according to IRS regulations. If you intend to deduct a donation on your taxes, be sure it qualifies first. The rules can be confusing, so you might need help from a tax consultant to get it right. For instance, you can deduct contributions to a qualified organization for flood or hurricane relief, but not if the contributions are earmarked for a specific person or family. Gifts to federal, state, and local governments may also qualify, but gifts to political candidates or lobbyist groups do not. Giving through crowdfunding sites like GoFundMe or school fundraisers are usually not tax deductible, either. The IRS lists more rules here.
Beware of charity scams. Unfortunately, charity fraud is huge business for scammers. When being approached by a charity you’re unfamiliar with, look for warning signs like being rushed into a donation, being asked to pay by alternative means like gift cards or wire transfers, or being thanked for a donation that you never made (to confuse you into giving). Scammers often use charity names that are remarkably close to well-known, legitimate organizations and they may reach out for donations during times of disaster. For other tips on what to watch out for, consider this advice from the Federal Trade Commission.
ive to organizations that pass the test. Whether you want to ensure a charity passes the IRS test or that you simply want your charitable donations to go to a reputable organization, it’s critical to find out if the organization is a 501(c)3 organization in good standing. The IRS offers a new online tool to help you do that. Then, research the charity through an online tool like Charity Navigator to be sure its financial health, accountability, transparency and other factors are up to your standards.
For inspiration, here are the top charities in San Antonio right now, scoring a 95 or higher on Charity Navigator’s rating scale:
- Animal Defense League of Texas: A no-kill animal shelter that is consistently one of San Antonio’s top charities when it comes to accountability and transparency.
- Texas Public Radio: A network of radio stations that broadcasts programs like Texas Standard, Texas Matters, and The Homefront Project.
- The Doseum: New to the list this year! It’s a children’s museum committed to developing innovative thinkers capable of meeting the challenges of the 21st century.
- San Antonio Food Bank: Educates and provides assistance to more than 58,000 individuals each week through innovative programs and services.
- Petco Foundation: Raising the quality of life for pets and people who love and need them.
- Habitat for Humanity of San Antonio: A nonprofit housing organization working with San Antonio families in need of affordable homes.
- Meals on Wheels San Antonio: Nourishing lives, enabling independence, caring for our seniors.
- San Antonio Humane Society: Connecting friends for live.
Feel free to contact us with questions about your end-of-year charitable giving and how it may affect your taxes.