Giving Thanks, Giving Back: How Charitable Contributions Can Benefit You at Tax Time
November is a season for reflection and generosity. As you look back on the year and all that you’re thankful for, you may also be thinking about how to give back to the people and causes that matter most. Whether you’re writing a check to a local nonprofit, donating stock, or volunteering your time, thoughtful charitable giving can create impact in your community and provide valuable tax advantages.
Here’s how to make the most of your charitable contributions before December 31.
1. Make Sure Your Donations Qualify
Not all contributions are treated equally for tax purposes. To claim a deduction, your gift must go to an IRS-qualified charitable organization. These typically include recognized nonprofits, faith-based organizations, schools, and certain public institutions.
Before donating, you can check eligibility through the IRS Tax Exempt Organization Search tool. Donations to individuals or political organizations, for example, are not deductible.
2. Keep Good Records
Documentation is key. For any charitable contribution—cash or non-cash—retain a record of the organization’s name, donation amount, and date. For contributions over $250, you’ll need a written acknowledgment from the charity. If you’re donating items or property, keep receipts or a list detailing the fair market value. For larger gifts (over $5,000 in value), an appraisal may be required.
3. Think Beyond Cash
Cash isn’t the only way to give. Donating appreciated assets—like stocks or mutual funds—can be a smart strategy. When you give appreciated securities you’ve held for more than one year, you typically avoid paying capital gains tax and still receive a deduction for the fair market value. This approach allows you to maximize your impact and minimize your tax burden—a win-win for both you and the organization you support.
4. Consider Bunching Donations
If you’re close to the standard deduction threshold, “bunching” can help. This strategy involves combining multiple years’ worth of donations into one tax year so your total deductions exceed the standard deduction. Next year, you can take the standard deduction again. Donor-advised funds (DAFs) can make this even easier by letting you make a large, single-year contribution while distributing grants to charities over time.
5. Don’t Wait Until the Last Minute
To count for this tax year, your contribution must be made by December 31. Electronic donations are typically counted on the date the transaction is processed, while mailed checks must be postmarked by year-end.
Charitable giving is about more than tax savings—it’s about aligning your resources with your values. But when you plan your giving strategically, you can make an even greater impact. If you’re considering year-end donations or want to explore tax-efficient ways to give, now’s the perfect time to schedule a planning conversation. We’ll help you make sure your generosity supports both your community and your long-term financial goals.
