Charitable Donations – Tis the Season to Spread the Love

Tips and resources for end-of-year charitable donations around Frisco, TX

The holiday season is upon us, and it’s the time of year we love to get wrapped up in the excitement and festivity of this magical time of year. It’s also the time many think about supporting others by donating to charities. Or, volunteering time for those in need.

People give to charities for different reasons. But almost everyone agrees that it just feels good to help. Whatever your reason, we have a few tips for you if you are trying to get those charitable donations in before the end of the year for tax reasons. (Yes, tax donations feel good too!)

And, we have tips for finding the right charity for your donations, plus a quick list of those charities making the nice and naughty list.

Tips for End of Year Charitable Donations

Income Tax Deductions

Charitable donations are a good opportunity for reducing income tax. But some things have changed over the last couple of tax years that may impact your tax savings. Notably, the Tax Cut and Jobs Act went into effect last year. This new tax law removed some deductions, increased the standard deduction, and raised the amount you can contribute for charitable tax deductions. Here are some key takeaways for income tax charitable deductions:

• Charity must be qualified – To receive a tax deduction for your contribution, the receiving charity must be a qualified 501(c)(3) organization. (Sorry, friends and family don’t count.) To check, visit the IRS Tax Exempt Organization Search tool.
• You must file itemized deductions – To take a tax deduction for charitable donations, you must file IRS Form 1040 and itemize deductions. The 2019 tax law changes raised the standard deduction amount (almost doubled), which may make itemizing deductions less likely for many people. Itemized deductions usually include things like mortgage interest, state and local taxes, charitable giving, and medical/dental expenses. To receive any benefit, your total itemized deductions should be greater than the standard allowable deduction as shown below:
  • Single – $12,200
  • Married filing jointly – $24,400
  • Head of household– $18,350
• SALT deduction capped- Another major change to the tax laws included capping the amount you can deduct for your mortgage interest at $10,000 (married, filing separately).
• Allowable donation amount– For the 2019 tax year, the IRS states that donations to a qualified, public charity can now be up to 60% of your AGI (adjusted gross income) to receive tax deductions on the income tax you pay.
• Credit card donations – If you donate with a credit card, the donation is recorded at the time of the charge for tax purposes, not when you pay the bill. It doesn’t matter if you pay the bill in January; the deduction will still apply for the tax year when the transaction is recorded.
• Get receipts– For any charitable donations made over $250, you must have a receipt. For donations of clothing, household goods, or other assets, consider taking photos and obtaining an appraisal of the current market value before the donation.
• Donor-advised funds – If you’re unsure which charity to support but want to contribute and claim a tax deduction for the current year, consider exploring a Donor-Advised Fund with your financial advisor. This type of fund allows you to contribute now, then select the recipient later. Find out more about Donor-Advised Funds.

Choosing a Recipient for Charitable Donations

There are so many options for charitable donations. Sometimes it can be unclear to decide where your money or contributions will have the greatest impact. Some nonprofit or philanthropic organizations are very good at marketing so that they may come to mind first. But, how do you know your dollars are making an impact?

How to Vet Charities Before You Make Donations

Thankfully, there are several ‘overseers’ of charitable organizations that dive into the details and help keep us informed about how efficient charitable organizations are at operations, transparency, fundraising, and applying our donated dollars to programs that support the intended beneficiaries. Here are three charity-vetting organizations you should know about:

1. Charity Navigator
2. Charity Watch
3. Better Business Bureau- Wise Giving Alliance

Each of these organizations uses different standards for vetting charities, but any of them will help you determine if your chosen charity is worth your donation investment. Charity Navigator lets you drill down using filters such as state, rating, category or cause, and even by size of the organization. Charity Watch provides lists and details of top charities, but requires a paid subscription for other charities not on the ‘top’ lists. Better Business Bureau Wise Giving Alliance operates similarly to the standard BBB lookup, enabling you to search for charities by name or region.

Finding Great Local Charities for Charitable Donations

Want your money stay close to home, or want to volunteer near Frisco? There are plenty of options to make an impact locally.

Some highly rated nonprofit organizations we love include the Frisco Family Services, Boys and Girls Clubs of Dallas, Boys and Girls Club of Collin County, and the SPCA of Texas. But there are so many great options that match your passion with your donation dollars or volunteer hours.

A great way to find these organizations is through the Great Nonprofits organization. Just enter your cause and location, and you’ll see a list of available options along with ratings and reviews for each organization.

At a Glance:  Best and Worst Charities

Need a shortcut to picking a charity for your donations? Consumer Reports provided a list of best and worst charities based on the three vetting agencies mentioned above. These charities made the list based on how efficiently they are at applying donated dollars to programs, among other factors.

Yes, it’s the most wonderful time of year! Time to share the love – and your story. If you have a favorite charity you love, we’d love to hear about it. Share with us on @thejudiwrightteam #MyFavoriteCharity.