When the holidays work their magic on us, they have a way of making our compassion bubble over, unleashing our inner generosity. Giving gifts to loved ones makes us want to give more, often to those who are less fortunate.
Donating to charity this time of year can bring a sense of meaning and fulfillment to your life. As an added bonus, it can also give your finances a little boost.
As a financial strategy, year-end giving not only helps you meet your charitable goals, but it can also earn you a break on your taxes. By writing off your charitable donations, you can ease your tax burden for 2019—and possibly enjoy a higher refund.
Here’s how it works
To claim a charitable donation, you’ll need to itemize your taxes. That means your total deductions exceed the 2019 standard deduction of $12,200 for singles and $24,400 for married couples. If you’re close to that threshold but haven’t quite hit the mark, a year-end gift can push you over the limit, allowing you to itemize all of your deductions for the year.
When deciding how much to donate, and to whom, you should first take a look at your financial situation. It helps to work with a financial advisor who can help you navigate the tax laws and figure out what’s best for your household.
Whatever you decide to do, make sure you maintain immaculate records for each donation you make. To write off a gift of $250 or more, you must have written acknowledgement of the donation from the charity. If you’re giving away cash or writing a check, you’ll need a letter of acknowledgement from the charitable organization or a bank record showing the gift.
Start giving today
Depending on your financial portfolio, there are many different ways you can give. If you have invested in stocks, bonds or mutual funds, you can transfer these directly to a charity without paying capital gains tax and claim a deduction on your taxes for the investment’s fair market value. If you have an individual retirement account (IRA), a charitable donation can help offset the cost of contributing taxable income to a Roth IRA. You can also keep it simple by giving cash, a check, or even using your credit card to donate to your favorite cause.
In fact, if you want to maximize the financial benefits of your year-end giving, consider using your OCCU credit card to make a donation. With our NICE Perks Platinum VISA, you’ll earn 2 rewards points for every dollar you spend on charitable donations. If you have a Duck or Beaver card, you’ll earn quadruple points on any donations you make to the University of Oregon Alumni Association or Oregon State Alumni Association. Add to that our low annual interest rate and it’s a financial win for both you and the recipient of your gift.
The magic of giving is that when you share what you have with others, the blessings are returned twofold. When it comes to year-end giving, that’s true financially as well as emotionally.
Are you considering making a year-end donation? Find out the benefits of making a monetary donation with an OCCU credit card.