Whether you want to become a well-known philanthropist or simply want to make small donations without any pomp and circumstance, chances are your kindness will go to a charity of your choice in the form of cash or property. In a lot of cases, people do this out of the kindness of their own heart, not really expecting anything in return.
But did you know that giving to a charity can be a benefit to you every year and that it could even be of benefit to your estate plan as well? If your interest is peaked then continue reading and take a look at what charities can do for you.
As you may or may not know, charitable donations are considered deductible on your taxes. Most donations that do not result in anything in return, such as cash donations or donating a car to a charitable foundation, can be written off on an itemized tax return, perhaps even leading to a larger return in the end.
It's important to point out though that if your donations for last year do not exceed the standard deduction for your filing status, then it may not behoove you to claim your generosity because it may not result in a tax benefit. The standard deductions for last year are $6,200 for singles and $12,400 for joint filers. Next year, the amounts will be raised to $6,300 for singles and $12,600 for joint filers.
Aside from the tax benefit for claiming charitable donations on your taxes, some people enjoy giving to charities later in life because it decreases the size of their estate, meaning less in estate taxes when they pass away. It's important to talk to a financial advisor about whether this is a good idea for your situation though.
As some of our readers know, making donations to a charity does not have to stop once a person has passed away. Here in Florida, a person can leave part of their estate to a charity in their will. They can also set aside funds in a trust for use by a charity or nonprofit organization as well.
In order to avoid nasty disputes between living relatives and the charity after a passing though, a person should consult with an attorney who has experience with estate planning and charitable organizations, such as those found here at the Law Offices of Frese Hansen.
Source: Market Watch, "Taxes: Make the most of your charitable giving," Bill Bischoff, Feb. 21, 2015