GOLDEN VALLEY, Minn. - The Tuesday after Thanksgiving is now known as Charitable Tuesday, a day dedicated to giving back rather than consuming. So with the charitable season in full swing, and with Giving Tuesday right around the corner, what are the best ways to give to charities? Justin Halverson from Great Waters Financial joined us with 5 tips to help maximize your contributions so that both you and the charity make the most out of your donation.
1. Don’t miss the deadline! First and foremost, it’s important to understand that all charitable donations must be made by December 31 in order for it to count toward your 2017 tax return. With just 7 full weeks left in the year, you’ll want to act quickly if you haven’t already made your contributions.
2. Don’t pay in cash – cash is convenient but it’s also the easiest way to forget about your donation come April 15. When possible, write a check or use a credit for your donation. The IRS considers a canceled check or credit receipt to be appropriate for purposes for record keeping. If you donate with cash, be sure to get a receipt documenting your donation.
3. Be strategic with how you donate—Make the most of your donations. The following are two of the best strategies for making charitable contributions:
DAF. A donor advised fund works as a charitable savings account. A DAF offers both flexibility and control. The donor can contribute to the fund on their terms and then move the money to their preferred charity when they choose.
QCD. A qualified charitable distribution is another great giving strategy that helps consumers give while reducing taxable income. The law went into effect in 2015 and allows someone to give up to $100,000 to charity directly from their IRA without being taxed when you are over 70 1/2 years old.
4. Scan your receipts –Everyone has their own system for keep tracking of receipts but it can be difficult to keep them organized. When you receive a receipt for your donation, I also recommend scanning it so you have an electronic copy as well. This can help remind you of all the donations you made when you go to file, while also providing back-up documentation. There are also aps available to help keep your receipts organized – including OneReceipt and Shoeboxed.
5. Don’t underestimate – Cleaning out your basement is a great way to not only free up some open space in your house, but also make a charitable donation. If you choose to donate items, list them as best you can and put a corresponding value to each item or group. Too often, taxpayers undervalue their donations. Turbo Tax offers an application within its software to help you value the items you donate -- www.itsdeductible.com.
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