Year-End Charitable Gifting Ideas


If you are looking for additional tax deductions, making a charitable contribution may fit the bill!

Uncle Sam encourages such gifts by allowing you to make gifts in various ways with some excellent tax benefits for some taxpayers.

The three basic rules for all gifts:

  1. The charity must be qualified by the IRS as a 501(C)3 organization. Request this information from the organization before making the gift to see if it qualifies. Charity Navigator is a useful tool to look up qualifying charities as well as directly accessing the IRS.gov website.
  2. In order to receive a tax benefit, you must itemize your deductions on your federal tax return. Not only that, your adjusted gross income (AGI) level must be below the phase-out threshold in order to utilize the benefit.
  3. You must obtain and retain a receipt that acknowledges payment from the organization. Remember, the IRS requires written evidence of any and all donations.

Ways to contribute:

  1. You may give the charity a check, money order, and most will accept credit cards. Untraceable cash is not recommended.
  2. You may donate appreciated assets that you have owned for more than a year. Stock, mutual funds, or real estate will all fall under this category. The best part is that you will receive a deduction based on the value of the assets at the time of the donation and avoid paying tax on the appreciation.
  3. If you are older than 70½, you can donate money directly out of your IRA.  While you will not get a deduction for this, remember this donation will consist of pretax dollars on which you never paid tax.

The fine print:
As with most tax planning ideas, there are pitfalls that may prevent you from claiming your deduction. We have already mentioned a few:the need to itemize, phase-out thresholds, and the need to own appreciated property for a year before it is donated. There are additional guidelines and we suggest if you are not very familiar with the rules and regulations that you consult with a tax advisor before making the gift.

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