For many people, donating to charities is a noble, altruistic act. But it is also a way to reduce your taxes.
According to Giving USA Foundation, 72% of all donations received in 2012 were from private or household giving. The IRS’s Statistics of Income for 2011 shows that individuals from the low and high end of the income distribution tend to give more donations than those in the middle.
At AOG Wealth Management, a Northern Virginia asset management company, we help our clients understand the tax benefits they may receive from charitable donations.
Listed below are a few facts about charitable contribution deductions:
- In general, you may deduct any donations of property or money you make to a qualified charity. Deductions cannot be higher than 50% of your adjusted gross income. There are times when a lower limit, such as 20% or 30%, may be applied.
- Make sure you’re donating to a qualified organization. If you received a benefit for your contribution, such as a ticket to a charity ball, you should deduct only the amount that goes above its fair market value.
- When making a charitable contribution, remember that you cannot deduct donations given to political candidates or groups and specific individuals. Qualified organizations you may contribute to include foundations or trusts created in the USA, churches or other religious organizations, war veterans’ organizations, and nonprofit volunteer fire companies. Charitable contributions are deductible only in the tax year they are made.
Do tax incentives drive charitable giving? In a study conducted by the Center on Philanthropy of Indiana University, researchers found that reducing the incentive may significantly affect the budgets of many nonprofit organizations. They concluded by saying that although tax deductions are not the primary motivations for charitable contributions, they affect how much a donor gives.
To learn more about charitable contributions and how they impact your taxes, get in touch with our Northern Virginia asset management specialists.
AOG Wealth Management offers investment advisory services offered through Kalos Management, Inc., 11525 Park Woods Circle,Alpharetta, Georgia 30005, (678) 356-1100. AOG Wealth Management is not an affiliate or subsidiary of Kalos Management, Inc.
Kalos Capital, Inc. does not provide tax or legal advice. The opinions and views expressed here are for informational purposes only. Please consult with your tax and/or legal advisor for such guidance.