What is Charitable Giving?
Simply put, charitable giving is the act of a gift of cash or property made to a nonprofit organization. This is usually to help or honor the organization’s goals, an action for which the donor receives a tangible tax deduction, as well as something intangible in the satisfaction of donating to a cause important to themselves.
Some points to take notes of in regards to charitable giving are:
- Taxpayers may deduct charitable contributions up to 60% of their adjusted gross incomes; this is capped depending upon the charitable vehicle and subject to change should laws change.
- Charitable donations to individuals, no matter how worthy, are not deductible.
- Donations totaling more than $300 in a year must be itemized.
- Note: According to the CARES Act, taxpayers who do not itemize their deductions and take the standard deduction instead are allowed up to a $300 deduction for charitable cash contributions in 2020. The Consolidated Appropriations Act extended this deduction to 2021. Married couples filing jointly who don’t itemize can deduct up to $600 of donations in 2021. Also, there is a limit to non-cash items that require appraisal.
Charitable donations in the United States can be deducted from the federal tax returns of the companies and individuals who make them.
In fact, the average U.S. taxpayer is eligible to deduct up to 60% of their adjusted gross incomes annually. Those deducting more than $300 in charitable contributions need to use Form 1040 or a 1040-SR form. They must also itemize their deductible contributions on a Schedule A form.
For charitable donation recordkeeping, see IRS Publication 526.
How does Midwestern Financial help with charitable giving?
Charitable giving tends to bring an immense amount of reward to both our clients and MFG alike. Not only does charitable giving grant eligibility for tax breaks, but it’s an opportunity to give back to the community as a whole and create a positive impact.
As with all aspects of our financial planning process, the first question we ask is: what’s the overall plan? What is your personal financial situation, how would you like to see your money distributed, over what kind of timeline, and to what specific organizations/groups would you want to see your funds given to?
One quality we like to emphasize for all our clients is the impact of the dollar today, and how it will change in the future. This can be a reason to give aggressively sooner rather than later, in order to see both more rewarding financial and community-based returns. However, giving today must be assessed in the context of all other goals and income expectations throughout one’s life.
At the end of the day, however, it’s not our place at all to say what is right or wrong, or where or who you end up deciding to give your money to. Our goal, first and foremost, is to give you the information you feel is necessary to make the right decision for you and your circumstances, no matter what.
Midwestern Financial Group: Charitable Giving, Made Easy
At MFG, we are driven by one goal: to help our clients build a bright financial future. We do this by providing unbiased, fiduciary financial planning and analysis. This means that our only payer is our clients—we don’t sell any products or take commissions. With MFG, you can be confident that you are receiving high-quality, goal-oriented financial services.
If you’re looking for help with your finances, our professional advisors can assist you with a wide range of needs. From investments and asset management to creating a college savings plan, we can help you achieve your financial goals. Contact us today to learn more about how we can help you reach your full potential.