Gifts to charitable organizations allow you to contribute directly to a cause you value. This can be humanitarian efforts abroad, medical research, veterans causes, or feeding the poor. Charitable contributions can also entitle you to a deduction on your federal income taxes.
Did you know individual charitable contributions vastly exceed the amount of corporate contributions to nonprofit organizations in the U.S.? This means regular people make the biggest difference. Every year, people across the country contribute more than $175 billion to charities they value. Of all demographics, research has consistently shown that seniors have the biggest hearts, giving money to charity twice as often as adults under 30.
If you're interested in donating to charity and you aren't sure the best way to do it, these questions can guide you through what you need to know.
Frequently Asked Questions
1. Can charitable donations reduce my taxes?
A: Yes, but only if you itemize your tax return. This means completing a Schedule A with your Form 1040. It's a good idea to itemize your deductible expenses, including charitable donations, when they are more than the amount of your standard deduction. For 2017, the standard deduction is $6,350 for single filers and $12,700 for married couples filing jointly plus an additional standard deduction of $1,250 for seniors. Make sure you are donating to qualified nonprofit organizations if you want the tax deduction.
2. How much of my charitable donation can I deduct on my taxes?
If you donate belongings, such as donating goods to Goodwill or the Salvation Army, make sure they are in good condition. Use the fair market value of the item to determine how much you can deduct on your taxes. If you donate a car, you should receive a Form 1098-C from the charity. This form will tell you what the nonprofit received from the sale of the car and what you can deduct.
The IRS allows seniors to deduct up to 60% of their adjusted gross income each year. If your charitable contributions are higher, you can't deduct the excess, but the charities will still benefit.
3. If I don't have money to spare, can I donate my time to a charity?
A: There are many ways to make charitable donations and make a difference. If you don't want to make a financial contribution, you can volunteer your time. For example, you can volunteer to walk dogs at a local shelter that probably doesn't have enough staff to manage day-to-day activities. You can even provide professional services like bookkeeping to a nonprofit. Just remember these types of donations can't be claimed as a deduction on your taxes.
4. How can I make sure I'm giving money to a legitimate charity?
A: You want your money to make a difference, so it's important to make sure your money is going to a legitimate charity that uses most donations for their stated cause. There are plenty of ways to do this. Websites like charitynavigator.org and guidestar.org can confirm whether a charity is a registered nonprofit and even how much money they spend on operations. If there's a specific cause close to your heart like veterans causes, a website like myphilanthropedia.org can help you find specific charities making an impact.
5. Do charity scams target seniors?
A: Unfortunately, there are many financial scams targeting seniors, including charity scams that target seniors' kind hearts. According to the FTC, there has been an epidemic of scam artists who pretend to collect money for veterans, police officers, and fallen firefighters. These have been called "badge charities." These scams are also common after natural disasters. These scams come in many forms, including mail, telemarketer calls, and even door-to-door solicitors.
Never give your credit card information or check information to someone you do not know. If someone solicits you in any way to donate to a charity, let them know that you will need to consider how much you want to give. Afterward, take the time to investigate the charity and make a donation directly but only if you actually want to make a contribution.
Hopefully you feel more confident about making charitable donations now. Charitable contributions by seniors give important nonprofits billions of dollars every year to make a difference in the world and your own community. With a bit of research, you can choose a trustworthy charity with a good track record of helping those in need.