Get Your Charitable Giving Done Before The New Year

There are so many worthwhile charitable causes you can contribute to that help people, animals, and the environment in many needed ways. Helping others is part of being human – it makes the world a better place for all of us. There are also tax advantages associated with charitable giving that can help you financially. So, it is truly a win-win situation. There is still time to get your charitable giving before the end of the year so it qualifies on your upcoming tax return. Read on to learn about some of the ways charitable giving can help your tax return.

Tax Advantages Associated with Charitable Giving

Donating to a charity or cause you believe in allows you to invest your hard-earned financial resources into something that makes a positive difference in the world. Through charitable giving, your legacy lives on long after you have passed away.

There are also financial benefits associated with charitable giving. When you donate to a charity or nonprofit organization, it may be tax-deductible. This means that your donation can be used as an itemized deduction when filing your taxes. The amount of the deduction depends on the nature of the organization and type of contribution made. If you plan on giving to a charity or non-profit organization soon, make sure to do so before the end of the calendar year. This way, you can deduct the amount from your 2022 taxes.

Giving to Charity Can Reduce Your Taxable Income

Charitable giving can also reduce your taxable income. Charitable donations are not subject to taxes and they may help lower your tax burden. This means that if you make a donation before the end of the year, it could reduce the amount of taxes you owe.

Avoid Capital Gains Taxes by Donating Long-Term Appreciated Assets

Long-term appreciated assets are those that have increased in value over time. These can include stocks, bonds, or mutual funds. If you donate one of these assets to a charity before the end of the year, you may be able to avoid paying capital gains tax on the asset’s appreciation. You can also take an income tax deduction for the fair market value of the assets.

Reduce Estate Tax By Naming a Charitable Organization in Your Will

The current estate and gift tax exemption is just over $12 million. So, while this issue does not apply to everyone, it will certainly apply to individuals with very large estates. If you name a charitable cause in your will, insurance policy, trust, or retirement plan, you can reduce or possibly even eliminate estate taxes. By making donations over time, you can remove assets from your estate before the total is taxed.

Call Us for Help

Charitable giving can be a great way to reduce your tax burden and support a cause that is important to you. If you plan on giving to charity, make sure to do so before the end of the year so it qualifies on your upcoming tax return.

The Naperville estate planning lawyers at the Gierach Law Firm have spent many years helping people contribute to many charitable organizations and they always feel better for having done so. Call our office at 630-228-9413 to learn more about how we can help you with all of your estate planning needs.

Sources:

https://www.charitynavigator.org/donor-basics/giving-and-taxes/tax-benefits-of-giving/

https://www.fidelitycharitable.org/guidance/charitable-tax-strategies/charitable-contributions.html