Tis the Season for Giving: How Giving Saves You on Your Tax Return

At this time of year, charitable giving comes natural to us all. Holidays make everyone more generous, and it is no surprise that charities receive the majority of their yearly donations the last few months of the year. There are many advantages to giving to charity. It makes your heart feel good, but it also can provide you with a tax deduction. If you make donations to qualified charitable organizations during the tax year, you may deduct the value of those gifts on your federal tax return.

With so many organizations out there, it is important that your hard earned dollars are donated well and to a charity that is strong financially. You want your gift to continue to make a difference, rather than given to a charity that may or may not be here next year. Many donors do not think about these things before giving. A recent survey done by Hope Consulting found that, only about a third of donors do any research when making a charitable gift. They’re much more likely to spend time evaluating choices about jobs, business investments or vacation plans with their family.

There are no limits on charitable contributions for most taxpayers. Most taxpayers will be able to deduct cash contributions in full up to 50 percent of their adjusted gross income. For cash donations, make sure you keep all of your receipts or bank statements with proof of amount and date gift was given. For non-cash donations, make sure every time you drop off outdated clothing, household furnishings or non-perishable foods at local charities or food banks you are given a receipt. These small donation trips can add up big time come tax season. These items must be in good condition or better, according to the IRS to receive credit. Charitable gifts must be completed by Dec. 31 in order to receive these tax deductions.

Be sure to consult with your own tax advisor about your specific tax situation or refer to http://www.irs.gov/taxtopics/tc506.html for more information. If you give with your head and your heart, your giving will warm you and others for a long time to come.