3 Common Charitable Giving Mistakes to Avoid

Whether the economy is growing or shrinking, people find a way to make charitable donations. Americans, in particular, give for two reasons: To provide support to an organization they are close to or care about, or to leave a legacy through their support.

We encourage you to consult with your tax advisor to discuss any and all tax-related strategies, options and deductions. Your tax advisor can help you to evaluate whether your charitable donation(s) is the right fit for your tax situation. Nothing in this communication is intended to constitute legal or tax advice.

Trends In Charitable Giving

In 2014, as the U.S. economy continued to steady, Americans gave an estimated $358.38 Billion to charity. The highest total in 60-years.

Charitable contributions also play a pivotal role in a well-conceived financial plan. They can enable your family to save on tax credits, generate an income stream and secure a significant amount of control over your wealth during life after death. The information below can help you get the most from your charitable giving strategy. It outlines common mistakes made when making charitable contributions

3 Common Charitable Giving Mistakes to Avoid

Although charitable contributions enable you use you wealth to further the ongoing work of organization, communities, causes that are important to you and provide you with tax benefits, these contributions come in various forms and must be documented with great care. The most common charitable giving mistakes are often overlooked by benefactors and can result in a loss of benefits.

  • Mistake 1: Not claiming out-of-pocket expenses incurred when volunteering for a qualified organization. Whether you deliver meals to elderly shut-ins or serve as a thought-leader within an organization, The IRS allows you to deduct certain out -of-pocket expenses such as mileage and parking costs incurred when serving as a volunteer.
  • Mistake 2: Confusing personal gifts with tax-deductible contributions. Giving personal gifts does not count as a deductible expense on your taxes. Although you are eligible to deduct charitable contributions made to qualified organizations that total no more than 50% of your adjusted gross income (AGI), gifts to individuals do not qualify. These are considered eligible under IRS gift tax provisions. With the emergence of online charity sites like GoFundMe.com and CrowdRise.com, it is quite easy to believe charitable donations are tax deductible. They are only classified as such if the recipient is an organization. If the recipient is an individual(s) if is falls under tax gift provisions and must be classified as such on tax forms.
  • Mistake 3Failing to keep proper records of cash and non-cash contributions. Just like any business, you should keep a record of all cash and non-cash contributions. Keeping an organized list or folder of all the contributions being made, not only makes it easier to locate your records at tax time, but helps ensure potential tax credits or deductions are not missed due to lost records or forgotten receipts.

Sources:

  1. Giving USA Foundation, 2015
  2. IRS, Charities and Non-Profits: Charitable Contributions and Deductions

 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG, LLC, to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2015 FMG Suite.

 

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