As the holidays and the end of the tax year roll around, I know a lot of clients plan to make a few final charitable contributions. This year, you are allowed to deduct up to 60% of your income in cash contributions to charity (previously it was 50%). While few reach this high limit, if you itemize, charitable giving is a great way to have a direct say in where more of your money goes.

A few things to keep in mind during holiday giving:
  • IRS does not allow deductions for gifts to political causes, only 501(c)(3) organizations. IRS provides a website where you can look up whether a charity is deductible. CharityNavigator.org is also a great resource to look up the deductibility, history and reputation of any major charity.
  • To deduct any contribution, you must have a thank-you letter, receipt, or bank statement that shows the amount, recipient and date. Keep these for your records, but you do not need to send me this documentation unless you would like me to total the amounts for you. A list is generally sufficient; I require more detail if the contribution is over $250. See the Instructions in your organizer package for more information.
  • Consider giving large amounts once or twice a year, rather than sending many small donations in response to mailings. This means less time spent paying and mailing checks, less time gathering receipts for tax preparation, less junk mail, and lower risk of giving to a fraudulent organization.