Take advantage of one of the most flexible tax planning tools. by Lee Sheilds, CPA…
by Kimberly A. Dula
A partner at Friedman LLP, and a member of Samaritan’s Planned Giving Committee, a volunteer group of the region’s leading financial professionals, lending their time and expertise to guide the charitable estate planning efforts
There is a mountain of information that can be found regarding elaborate ways for you to give your money away. Setting up a charitable trust such as a CRAT or CLUT, donating to a donor advised fund, or even creating a private foundation that can help you to carry on your family name are some of those strategies. But most people are just looking to make a simple cash donation. It’s quick, it’s easy and it’s generally pain free. Sometimes, however, because it is so quick and easy, people can make mistakes that can cost them.
People make donations to charity because it makes them feel good, it helps others, and in most cases it will lower your tax bill. For all of these reasons, you want to make sure that you are doing everything necessary in order to guarantee that all of this happens when the contribution is made.
First, if you are considering making a donation, investigate the charity in order to make sure that it is qualified. The Internal Revenue Service has easy to find data on its website that provides information about qualified charities. You can also visit the charity’s website.
Many times the website will specifically indicate if a donation would be considered tax deductible based on Internal Revenue Service regulations. For example, Samaritan Healthcare & Hospice clearly states that it is a 501(c)(3) organization, not-for-profit organization, which allows the donor to become more comfortable with their decision to donate here.
Also, be careful of scams. Unfortunately, this is becoming more and more of a problem, especially in times of great tragedy. If someone reaches out on the phone or through email, be sure to take precaution before giving out any personal information. Never make an immediate donation. Perform your own due diligence and vet the organization before committing to anything.
Second, always make your donation by check or credit card. This helps to create a paper trail for the donation which you will need should you have to supply supporting documentation to take the deduction on your return. It is also very easy to make donations at almost any time. Today we can make donations over the internet or even through text. Due to this ease, it is not uncommon for individuals to lose track of the contributions that they have made throughout the year.
The following are some tips that you can use to better track your contributions:
Finally, if you are considering making a large cash donation to Samaritan Hospice, be sure to plan for it. For tax purposes, it may make sense to make the donation in one year verses another. With proper planning, you can ensure that you are getting the greatest tax benefit.
These are just a few recommendations for anyone who is considering making cash contributions. You should also check with your own professional tax advisor so that she can assess your own personal situation.
This article was prepared by Kimberly A. Dula, CPA, a partner at Friedman LLP, and a member of Samaritan’s Planned Giving Committee, a volunteer group of the region’s leading financial professionals, lending their time and expertise to guide the charitable estate planning efforts. As always, we recommend consulting your financial advisor. To learn more about charitable estate planning and membership in The Legacy Society, please contact Samaritan’s Chief Development Officer, Chris Rollins, CFRE, at (856) 552-3287.