Tossing, selling and donating. Do you want to know what your donations might be worth? Here is a starting point
The end of the year is coming up. People are meeting with their tax preparers to find out how to increase their deductions.
Now is a great time to increase your charitable donations. The charities know it too, so they increase their advertising this time of the year. Most of them look like great causes, but, you need to determine if the charity is legitimate and how your donation will be used.
Choosing a charitable organization can be challenging. Here’s what you need to look for:
- They must have a 501(c) tax status if you are planning to deduct this on your IRS tax return.
- Find out how much of each dollar is used for the cause, versus how much is used for administration expenses. The higher the dollar amount used for the cause, the better.
How do you find that information? Go to www.Give.org before making your donation.
Once you have chosen your charities, make sure you have the proper documentation for tax purposes.
- For monetary donations, a cancelled check can be your receipt.
- For non-cash items such as food, clothing, household items, furniture etc., you will need to make an itemized list of the items with the value. Your tax preparer can help you to determine the value of each item. Make sure to get a receipt for your donation. Attach this to your itemized list and keep it with your tax records.
With the end of the year coming up, people are being asked to make donations to many organizations While others are planning ahead for the end of the tax year Either way, you need to make sure the charity that you are donating to is legitimate.
With many people out there to scam people, choosing a charitable organization can be challenging Here’s what you need to look for:
- Find out whether they have a 501(c) tax status if you are planning to deduct this on your IRS tax return.
- Find out how much of each dollar is used for the cause, versus how much is used for administration expenses The higher the dollar amount used for the cause the better.
To find out this information go to www.Give.org to do your research before making your donation Once you have decided to make your donation, then you need to make sure you have the proper documentation for tax purposes.
For monetary donations, a cancelled check would be your receipt For non-cash items such as food, clothing, household items, furniture etc, you will need to make an itemized list of the items and the value Make sure to get a receipt from the organization that you are making the donation to Attach this to your itemized list and keep with your tax records.
Unfortunately, it’s fairly easy to set up a charity, and fundraisers can legally keep most of the money donated to the cause Before you donate, find out whether the charity is legitimate You should also find out how your money will be spent.
You can start your research at www.Give.org (associated with the Better Business Bureau) This organization researches charitable organizations to find out how they use the funds they receive.
Here are some tips to help in your research:
- Find out if the charitable organization has a 501(c) status (IRS code for non-profit organizations) Non-profits have stricter requirements, and your donation will be deductible on your tax return.
- Find about how much of each dollar is being used for the cause versus administration costs The more administrative costs, the less of each dollar is being used for those in need Look for the low administrative costs.
- For cash donations, request a receipt to use as documentation on your tax returns All donations over $500 will require additional paperwork, so speak with your tax preparer ahead of time.
- When donating non-cash items such as food, clothing, furniture, etc, You will need an itemized list of the items you donated and the total value Most charities will ask you to value your own items Make sure you get a receipt for your donations with the charity’s information on it.
Do your research and chose the organization(s) wisely This is a great way to help out others who are less fortunate than you during this holiday season.
A friend of mine recently asked about lending money to a friend. I have always said that if you can afford to lend money to a friend, then give the money as a gift. If the gift is repaid, that’s an unexpected bonus.
But, you should never lend money to friend, especially money that you need to pay your own expenses. I say this because when people lend money to a friend, they often never get the money back, That’s not because your friend isn’t trustworthy, or sincere. It’s a matter of need. Think about it: If your friend can’t afford to pay a bank loan or rent, then how will he be able to pay you? Especially before you need the money yourself? Unfortunately, lending to a friend often means the friendship is lost along with the money.
It’s difficult to watch a friend drowning in debt or suffering without a car or apartment, but two drowning people are not better than one. There may be better ways to help out than putting yourself at risk.
Back to my friend. Unfortunately, she had already lent a substantial amount of money. She had also done everything possible to set up the loan legally with a contract, lien against the borrower’s home, and a formal payment plan. It sounded OK, so, I asked what the problem was. She said that her friend had filed for bankruptcy. That’s a problem.
My friend did everything right and took all the steps to protect herself, and now she will be out a large amount of money that she needs to cover her own expenses. She could never have afforded to give this amount as a gift, but that’s what it became. Will she get her money back? Probably not. In this economy, her friend’s home may not sell and when it does, it probably won’t sell for enough money to cover the loan.
My friend learned a very hard lesson in life. Their friendship will probably never be the same because of the damage that was done. Before you lend money to someone, think about all the possible outcomes and then make your choice.
The best way for you to donate and help is to research the charities before you give. Some charities may want monetary donations, others may want specific items.
Whatever you chose to do, make sure that your donation is being put to the best use for the cause and not lining someone’s pockets.
First you need to choose a charitable organization. Even if you have a specific cause in mind, there could be many organizations claiming to support the same goals you do.
Second, you will want more information about a charity, and how they use their funds, go to www.give.org. Here’s what you need to know:
- Find out how much of each dollar is used for the cause, versus how much is used for administrative expenses. The higher the amount used for the cause the better.
- Find out whether they have a 501(c) (3) tax status if you are planning to deduct this donation on your IRS tax return.
Now that you have selected the charity of your choice, you will to decide whether you will be making a donation of money or specific items to the charity. Check to see what they suggest is best for what you want to accomplish.
For monetary donations, you should always use a check / debit card or credit card so that there is a record of the transaction. This is the easiest way so that you have proper documentation.
If you are donating specific items, you will need to have a record of what you are donating. For non-cash items, you can use the purchase receipt, itemized list along with documentation from the charity. Please check with your tax preparer, so that you have the proper documentation.