Blackbird Philanthropy Advisors Featured in Cheapism Article on "How to Get Tax Breaks Through Charitable Donations"
GET TO GIVING
As the clock winds down on 2018, many people are scurrying to make their final charitable donations of the year and tally up ones already made. In 2017, Americans gave $410 billion to charities, an increase of five percent over the previous year. For those looking for ways to make the most of charitable donations before the end of the tax year, here are some tips and insights from experts around the country.
KNOW THE NEW TAX LAWS
Under the new tax laws recently adopted, the standard deduction for filers has roughly doubled. It’s now $12,000 for single filers, $18,000 for head of household, and $24,000 for joint filers. Those increases will likely have a profound impact on people’s interest in making charitable donations. “If you’re taking the standard deductions, you cannot itemize,” explains Mark Charnet, founder and CEO of American Prosperity Group. “That’s going to horribly dissuade people from making charitable donations. Unless they itemize on their taxes, they will not get a reduction on their tax bill for the charitable contributions and therefore will be disincentivized to make donations.”
KNOW HOW MUCH YOU CAN DEDUCT
The law generally allows for deducting contributions up to 50 percent of your adjusted gross income, when such contributions are made to qualifying 501 (c)(3) entity or other qualifying organization, explains Caitlin Worm of Blackbird Philanthropy Advisors in South Bend, Indiana. “Some organization types only qualify for a 30% limitation, such as private foundations, while others qualify for a 60% limitation, such as federal government units,” says Worm.
RESEARCH WHERE YOUR MONEY WILL GO
If you’re planning to donate to a non-profit organization, otherwise known as a 501(c)(3), find out how your contribution will be used. How much will go toward the cause and how much goes toward administration? A variety of third-party evaluation and ratings sites can help with this effort, such as the Better Business Bureau’s Wise Giving Alliance, Charity Navigator, and Charity Watch, which review a charity’s finances, governance and effectiveness. “Better ratings will indicate that the organization allows for the majority of the donations to go right to the cause,” says Jacob Dayan of Community Tax.