Contributing to charities comes with a load of tax rules. In this week's audio podcast, Miguel Gonzalez shares a few things to think about regarding charitable giving.
Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®
CLICK HERE TO LISTEN TO MIGUEL'S LATEST PODCAST
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Contributing to charities comes with a load of tax rules. In this week's audio podcast, Miguel Gonzalez shares a few things to think about regarding charitable giving.
Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®
CLICK HERE TO LISTEN TO MIGUEL'S LATEST PODCAST
FOLLOW US ON:
INTRODUCTION
Welcome to Cortburg Speaks Retirement
An audio podcast about investing in the stock market, financial planning, money management and retirement planning. Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.
Now here is your host, Miguel Gonzalez.
HOST
Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.
On this week’s audio podcast, I will discuss the rules for charitable giving and how working with a financial professional, like Cortburg Retirement Advisors, can help guide you through the changing maze of IRS rules.
Contributing to charities comes with a load of tax rules. Here’s are a few things to think about..
Every April 16th (or in 2020, July 16th) should remind us of everyone’s least favorite season – tax-planning time. Because starting well in advance of the deadline for filing taxes is simply a prudent thing to do.
Now, consider keeping many tax tactics in mind when preparing your next year’s return, especially if you hope to lessen your taxes and itemize deductions on Schedule A. These deductions might include medical and dental expenses and unreimbursed employee business expenses – and amounts given to charities.
Deducting charitable contributions can potentially whittle your taxes. But rules for charitable giving can be confusing and you must be careful before entering that deduction.
What kind of donation will you make this year? The maximum you can deduct depends on whether you donate cash or property and on the type of charity as defined by the Internal Revenue Service:
The IRS Rules are Always Changing
In most years, any donation generally maxed out at 50% of your yearly income minus deductions, or adjusted gross income (AGI). And deductions for donations to certain groups such as veterans’ organizations, fraternal societies, nonprofit cemeteries and others often maxed out at 30% of your AGI.
But guess what? The IRS put a temporary limit on charitable contributions (and this is expected to change yet again, so be careful before you donate).
Taken directly from the IRS website:
“In most cases, the amount of charitable cash contributions taxpayers can deduct on Schedule A as an itemized deduction is limited to a percentage (usually 60 percent) of the taxpayer’s adjusted gross income (AGI). Qualified contributions are not subject to this limitation. Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income. A corporation may deduct qualified contributions of up to 25 percent of its taxable income. Contributions that exceed that amount can carry over to the next tax year. To qualify, the contribution must be:
Contributions of non-cash property do not qualify for this relief. Taxpayers may still claim non-cash contributions as a deduction, subject to the normal limits.”
Know Where You’re Donating
To whom do you want to donate? The IRS requires that you give to a qualified organization in the U.S. to claim a deduction. An organization’s merely claiming tax-exempt status doesn’t automatically make your donation deductible.
Many major charities fit the criteria, but double-check that your organization of choice makes the list. The IRS offers a search tool to look for qualifying organizations.
Learn what you may not know. You can never deduct some donations, for example, such as Bibles, gifts to individuals and donations to political parties or candidates. Services provided are also not deductible.
Among other fine points of deducting donations:
For deductible cash donations, the IRS requires standard documentation of a bank record, payroll deduction or written communication from the qualified organization. This communication must include the name of organization and the date and amount of contribution regardless of the amount donated.
For all donations (cash and property) more than $250, you must show the above documentation, plus a written acknowledgement of the donation’s amount and whether any portion of the donation was in exchange for goods or services.
These few reminders only skim the surface of charitable giving. Best to check with a financial professional before you consider giving until it hurts.
Make sure to visit our website, www.CortburgRetirement.com. Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances. As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.
This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.
DISCLOSURES
Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
CRC conferred by The International Foundation for Retirement Education.
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.
Private Advisor Group, LLC and Cortburg Retirement Advisors, Inc. are separate entities from LPL Financial.
Investing involves risk including possible loss of principal.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This article was prepared by FMeX.