As 2013 draws to a close, thoughts go to giving gifts to loved ones and to charitable organizations. Often we can support both at the same time by gifting items purchased at nonprofit gift shops such as the Morris Graves Museum of Art or the Friends of the Dunes Humboldt Coastal Nature Center. There are also many ways that the community donates their time and talent to support nonprofits and the people they serve.
During the holiday season thousands of Humboldt, Del Norte and Trinity County residents from all walks of life support causes they care about with financial contributions, large and small. For many nonprofits, a high percentage of donations are made in December (often delivered in the last days or even hours of the year), which allows donors an opportunity to deduct their charitable contributions on their upcoming tax returns.
Charitable donations can help reduce the amount of taxes owed for the year, while supporting the health and strength of local projects. When planning to make contributions, there are a few rules to follow to ensure that the IRS will recognize the tax deduction. The most helpful tip is to plan ahead.
Here are a few additional reminders to help ensure that charitable giving done by Dec. 31 can give back on April 15:
o Contributions are deductible in the year made and therefore must be postmarked or hand-delivered by December 31, 2013 to qualify as a deduction for 2013 taxes. Keep in mind that many nonprofits do not have an online giving option on their websites and may be closed on Dec. 31.
o Meet with your professional financial advisor early to discuss options of giving long-term appreciated stock. Donations of stock are beneficial as you can save taxes in two ways. First, you avoid paying any capital gains tax on the increase in the value of your stock. You also receive a tax deduction for the full fair market value of the stock on the date of the gift.
o If you are over 70.5 years of age, you can make a gift from your IRA by transferring your IRA assets directly to charity. By going directly to charity, the money is not included in the IRA owner’s income and is not taxed, preserving the full amount for charitable purposes. Your financial advisor and broker can assist you with the transfer.
o Life insurance policies can provide charitable deductions when a charity is named as both the owner and the beneficiary of the policy. Your insurance agent can offer information on this process.
o You can receive a tax deduction for 2013 and choose organizations you would like to support later by creating a donor-advised fund which can make annual contributions throughout the year to charitable organizations. Humboldt Area Foundation can assist with establishing a fund.
o Only donations to nonprofit organizations are tax deductible. If you are not sure whether an organization qualifies as a charity, check their status at www.guidestar.org or ask to see their IRS letter of determination.
Any choice to support charitable organizations makes a difference for our greater community and has a real benefit for your state-of-mind as well. The best part is that it feels good to donate today, and it might feel even better at tax time.
To assist with any last minute charitable contributions, Humboldt Area Foundation will be open on Dec. 31 from 8:30 a.m. to 5 p.m. to receive contributions to any of the funds we manage. The Foundation is located at 363 Indianola Road, Bayside, CA 95503
Chris Witt is the director of planned giving and fund development at Humboldt Area Foundation. For questions regarding planned giving, contact Chris at email@example.com or 707-442-2993.