There is nothing more fulfilling than to help others by giving. If you are like most people who donate, it is important that you are not only charitable but also wise. The Internal Revenue Service (IRS) gives anyone a tax break for providing donations to qualified charities. And so, if you give, then you shall also receive something back in the form of a taxable income—effectively lowering your tax bill.
You need to have a plan before you start writing your donation checks. Not only will this make your charitable affairs in order, but you can also enjoy tax deductions. Thus, this article will teach you how to plan for your charitable giving.
Choose A Charity That You Want to Support
The most important thing that you need to do is to choose a charity that aligns with your outlook in life. Ask yourself the following questions:
What kinds of skills or gifts do I possess that can be used to serve a particular cause?
What problems or issues I am passionate in solving?
Are there any charitable organizations around me that need my support?
Once you have answered these questions, it will be easier for you to decide which charitable organizations can match your interest and passion. For tax break purposes, it is also crucial to check which institutions are qualified by the IRS.
Create A Budget
The next step that you need to do is to determine how much you want to give and the frequency. Establishing a budget gives you a framework to create decisions that work best for you. It will also help you keep track of your contributions throughout the entire year.
The amount that you can give to a particular charity largely depends on how much you earn and how much you want to reduce your tax burden. Remember, you don’t have to give everything that you have away; otherwise, you won’t have anything left. What you need is to have a proper balance of what you earn and how much you give away.
Establish Better Relationship with The Charity You Support
Although giving donations anonymously is a good thing, it helps build rapport if you take part in the charity that you support. It is crucial that you have a good relationship with the charity so that you know more about their cause. Take time to visit them so that you understand their plight and the issues that they are currently facing.
Itemize Your Contributions
Itemizing your contribution will help you get tax benefits. There are many ways for you to get a tax benefit, but it will help you further if you seek professional advice. Set up a meeting with a portfolio manager who specializes in making strategic plans for charitable giving.
Donating to charity can be a rewarding experience, but there are several tax implications that you need to understand before you make donations. Don’t be hesitant to seek help from a financial advisor so that they can help you navigate your way through uncharted waters of charitable contributions.
Let the financial advisors at MKS&H help you understand how to plan for charitable giving.