With recent news of a devastating typhoon in the Philippines, major earthquake in Indonesia, tsunami in the American Samoa, and flooding in Atlanta... many Americans feel compelled to help. What can you do?
If you are Red Cross-certified to assist in emergency situations you may be pinged by the organization to assist in relief efforts. However, more likely, physically participating in the relief efforts may not be feasible. Then, there is donating your money. At a time when the economy is weathering its own storm, you may feel like making a monetary donation is not an option. But, it still might be.
The IRS confers significant tax benefits for donations, making donating more palatable then you might have thought. As outlined by Charity Navigator-- a national evaluator of charities-- here are 5 reasons why you may still be able to afford to donate:
1. You may be able to claim a charitable contribution deduction against your income tax if you itemize deductions made to a qualified charitable organization.
- the amount you donate can actually be reduced by tax savings if the donation is deductible
- for example, for tax payers in the 33% tax bracket, the actual cost of a $100 donation is $67
- and as your tax bracket increases, you actually pay less for donating more
2. You can deduct a qualifying contribution in the year it is paid.
- keep track of checks and credit card payments and be sure to file in the correct year
3. Most charitable organizations qualify for a charitable contribution deduction.
- most non-profit organizations and charitable causes will be eligible, check with organization to be sure
- donations to foreign governments, foreign charities, and certain private foundations are not deductible
- utilize websites such as CharityNavigator.org to determine the tax deduction eligibility of particular charitable organizations
4. You can donate a lot before you reach the limit on how much you can deduct.
- unless you are planning to donate more than 20% of your adjusted gross income to a charity, the limits on deduction likely won't apply
- if you are planning to donate a significant portion of your income, you should contact a tax consultant about deductions and filing considerations
5. You can deduct certain non-cash donations too.
- property owned for more than a year can be donated, with the deduction oftentimes valued as equal to the property fair market value---even if the property has appreciated in value since purchase.
- when donating electronics, clothes, household items, furniture, and other used items to Goodwill, Salvation Army, American Cancer Society's Discovery Shop, or any number of other non-profit organizations accepting in-kind donations, collect a donation receipt and cite the donation in your tax return.
Keeping track of donations by saving documentation is key, but with a little planning and forethought, you can still manage to donate financially to a compelling cause, without breaking your personal piggy bank.
And if donating funds is still a tough option, there are still ways to get involved. Partner with an organization who is assisting one of the causes you want to support and determine what the needs are. If blankets and baby clothes are needed in the Philippines, you may be able to organize a drive to collect the items and coordinate with the organization to have the items shipped over. Alternatively, if clean drinking water has turned into a commodity in the American Samoa, you can identify an organization that is finding ways to supply it and see how you can assist in the efforts.
So, whether it is your time, money, or efforts... you still have a lot available to give.