In the season of giving, some folks are in a position to share their blessings and give to charitable organizations. As a taxpayer, you’ll be eligible to receive a tax deduction to a certain limit. Rules and laws change frequently but these are the basics for 2019.
Check if the organization is legit
The IRS has a website to check organizations that has the 501(c)(3) or non-profit status.
Organizations mostly have tax holiday drives during this season. Where it’s convenient to write a check and have the receipt on the same day.
Bunching your tax deductions
Bunching Tax deductions is combining your tax deductions in a single year. This is a good strategy to cross the minimum threshold where you can itemize your deductions and lower your taxable income.
You’ll be able to pay less in taxes and have additional savings.
The following year, you can opt for the standard deduction.
This is could make your charitable gifts tax efficient.
Business gifts are tax-deductible too
If you give gifts to your clients, most of them could be tax-deductible too.
Remember, it is only tax-deductible to a certain amount.
It’s no more than $25 per individual!
Keep the receipts for those gifts
If you have clients that are a couple, they can only receive $25 as a couple for you to benefit from the deduction.
It is important that you keep receipts for your records to justify the cost.
Standard Deduction vs Itemized Deduction
Your income determines your standard deduction. See the table below.
If you pass the threshold in terms of your standard deduction you can itemize your deduction and reduce your tax liabilities for the year.
Determine your tax bracket to maximize this deduction. See the guide below on where you fall in reference to your income.
| Filling Status | Standard Deduction |
| Single | $12,200 |
| Married filing jointly | $24,400 |
| Married filing separately | $12,200 |
| Head of Household | $18,350 |
The combination of charitable donations, property tax deduction and still come out ahead.
Giving to a great cause
Charity donation helps the organization to further its cause. Having a tax-saving opportunity available to reduce your tax liability is a win-win for all parties.
Important Reminder:
Keep receipts of the donation for documentation when you file your returns. As stated above, donation limits vary, so keeping those receipts is important in case the IRS would ask for proof.
If you planning to donate before the end of the year but are not sure if the donations will benefit you, let us know!
This way we can run scenarios’ if the donations will benefit you when you file your returns.
