Posts Tagged ‘charitable giving’

Dos and Don’ts of Gifting & Donations

Thursday, December 10th, 2015

Is it just me, or can you feel the magic in the air this time of year? Even though the days are colder and the nights are longer, the holidays seem to bring out the best of humanity; and, having worked with many not-for-profit organizations over the course of my career, I have the pleasure of seeing some of the best of humanity first hand.

Listen now: The Warm Glowing of Giving

People choose to make donations to organizations and initiatives for many reasons. We learned in episode 11 of our podcast: “The Warm Glow of Giving,” that charitable donations are primarily guided by the heart and that 87 percent of all donations are made by individuals. That being the case, I still believe individuals – as well as businesses – should embrace strategy (the head) when it comes to writing checks to a worthy cause.  Here are some do’s and don’ts to keep in mind when writing your check to charity.

Gifting Donations - Ohio Accounting Firm

Looking to make a donation this holiday season to your favorite charity? Keep these dos and don’ts in mind before making that donation.

Do

  1. Do your research. Make sure you learn all you can about the organization you are donating to. You want to make sure you are donating to a worthy cause and not a fake charity.
  2. Know where your money is going. Find out how the organization will use your donation. It is OK to ask prior to your donation.
  3. Understand how this will affect your taxes. Most people know that making a donation can lead to a tax deduction, but do you know how much you can claim? If not, this is something your Rea advisor can help you understand.
  4. Get documentation. Any donation of $250 or more requires documentation if you are going to use it as a tax deduction. A cancelled check, receipt, etc. all work as documentation to include with your tax return.
  5. Give away appreciated assets, such as stocks. When doing this you get a deduction for the full value in most cases and you escape  the capital gains on the appreciation.

Don’t

  1. Expect a gift in return for your donation. That’s not the true meaning of a donation. Also, to be deductible, a gift cannot be received when making the donation, including a meal. If the donation was made at a dinner event, the cost of the meal must be subtracted from the donation amount.
  2. Pay with cash. For tracking and to prevent fraudulent activity, paying by check or credit card is usually the best option.
  3. Give randomly. Do your homework when donating, you won’t regret it. Make sure your money is going to a good cause and being used properly.
  4. Give more than you can afford. We all want to help, but donating more money than you can afford just creates more problems for you. Don’t put yourself in a situation where you are giving away more money than you can afford.
  5. Give away assets that have declined in value. Doing this will waster the capital loss opportunity for you.

Around 358 billion dollars are donated to not-for-profit organizations every year and these organizations turn around and do amazing things with your gift. From feeding the hungry, providing support to veterans and ensuring that others get the health, monetary or education assistance they need, nonprofits are an critical component of our society and you can be sure that the money you donate to any one of these types of organizations is appreciated. But you should still make sure you are using your head when making a donation to ensure that your money is being used in the best way possible. Want to learn more about how to choose the right not-for-profit organization for your tax-deductible donation? Listen to episode 11 of our podcast, Unsuitable on Rea Radio. You can also email Rea & Associates to get answers to your specific questions..

By Lesley Mast, CPA (Wooster office)

Learn more about the benefits of donating to charity. Check out these blogs posts:

Is It A Charity Or A Scam?

Tis The Season: Charitable Giving Through A Donor-Advised Fund

Charitable Giving Is Good For The Heart, The Soul And The Tax Return

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5 Tax Deductions To Ease Your Business’s Tax Burden

Thursday, March 12th, 2015
Tax Deductions Add Up

If you made a donation to a nonprofit organization last year, it’s almost guaranteed that you are eligible to deduct at least a portion of your contribution from your income.

The Internal Revenue Service (IRS) reported earlier this month that nearly 59 million 2014 federal tax returns have been filed so far this filing season. While that may sound like a lot, there’s still a ways to go as, according to IRS estimates, three of five taxpayers are still waiting to file. For those of you still working on your tax prep, there is still time to claim some valuable deductions. Here are five deduction options to help small businesses make the most of the 2015 filing season:

1. Ohio Small Business Deduction

Many small business owners in Ohio are eligible to receive help from the state on their 2014 tax returns through the Ohio Small Business Deduction. Initiated by Ohio Gov. John Kasich and considered to be “the largest overall tax reduction in the country,” the deduction allows eligible small businesses to take a 50 percent tax deduction on their first $250,000 of business income. However, for the 2014 taxable year only, that percentage was increased to become a 75 percent deduction of “net business income from an individual’s adjusted gross income reported on their Ohio personal income tax return.” Your financial advisor can help you learn more about the Ohio Small Business deduction and help you take your business strategy to the next level.

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2. Section 179 Deduction

When Congress voted in favor of the Tax Extenders Act late last year, among the many tax incentives that were extended included an action to retroactively reinstate the $500,000 depreciation limit on the Section 179 deduction as well as the 50 percent bonus depreciation. Together, these tax incentives have the potential to save you and your company hundreds of thousands of dollars on equipment purchases. Limits and restrictions do apply, however, so make sure to work with a trusted advisor who can make sure your purchases actually qualify.

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3. Personal Vehicle Deduction

If you drive your personal vehicle for business, then you may be able to deduct the expenses related to your car or truck as long as the vehicle was actually used for business purposes and not just commuting. A professional advisor can help you determine if you qualify to claim the deduction and can help determine which deduction method is the best one to use given your personal circumstances.

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4. Stock Gains Deduction

Some qualified businesses may also be able to exclude the gains generated by qualified small business stock per provision IRC Sec. 1202. Originally passed by Congress in the 1990s, this provision was designed to help reinvigorate the importance of continued investment into our country’s small business infrastructure. This incentive is a little more difficult than some of the others, but if you qualify, you could realize significant savings. Because of the complicated nature of this particular provision, it is essential that you work with a tax advisor to find out if you qualify.

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5. Charitable Giving Deduction

If you make a donation to a nonprofit organization during the year, it is almost guaranteed that you will be able to deduct at least a portion of your contribution from your income. But there are rules that need to be adhered to. A good financial advisor can help you get the maximum benefit for every dollar donated.

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For more information related to specific tax and deduction questions related to your business, email Rea & Associates.

By Lesley Mast, CPA (Wooster office)

 

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What Tax Benefits Exist When You Donate to Charity?

Tuesday, March 18th, 2014

We’re three months into 2014, and you may be thinking about what charitable donations you’d like to make this year. If you’re planning to make a donation to a qualified 501(c)(3) non-profit organization, make sure to look at your investment portfolio before you write a check.  (more…)

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Do You Have to Take a 2012 Required Minimum Distribution?

Wednesday, January 23rd, 2013

ACT FAST: Limited Time Offer for RMDs

Thanks to a hot-off-the-presses provision in the new tax law, taxpayers over 70 ½ have a very limited window to address 2012 required minimum distributions (RMDs) from their retirement accounts.

Here’s what happened: an incentive for donating your RMDs directly to charity tax-free expired in 2011, so at the end of 2012 many of you weren’t sure what to do. Some of you may have taken your RMD as usual and used that money toward regular living expenses, but other retirees who typically donate their RMD to charity may have taken a different approach. (more…)

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