Make a charitable donation before December 31st AND get a tax deduction

Nov 29, 2022

I get a lot of questions at this time of the year about giving to charity. How much to donate? What will I save on my taxes and as with all tax questions, my answer is, “that depends”.

How much can you give to charity? Well you can give 100% of your income to charity and deduct that against your income. Is it all deductible? That is where things get complicated. If you take the standard deduction then no, none of the donations will be deductible. Please make sure you understand what the standard deduction is and if it applies to you. Ask your tax advisor about this if you are at all unsure.

Then, how much money will you save by making a charitable donation and deducting it on your personal tax return? Again, that depends. It depends on your tax bracket, how much tax you pay. This is an easy calculation that your tax advisor can do for you. It does require a calculation though and not a guess. Guessing is dangerous when it comes to money and taxes.

However, dollars aside, there are some very specific tax rules as relates to charitable donations and their deductions. The donation must be made in the calendar year, so before December 31st. The donation must be to a registered charity with the IRS designation of a 501(c) 3. For example, a gift to a sick relative is NOT a charitable deduction as your sick relative is not designated as a 501(c)3 by the IRS. So before you give, please do confirm the IRS status to avoid disappointment when you file your taxes.

Also, if you have any questions at all, please do reach out to me so that we can address those questions and be clear about best next steps for you.

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