First of all, kudos to you if you know where that saying came from.
Second, let’s talk about charity.
Not a charity; your charity.
I’ve talked about my Give & Take on Tithing.
Charitable giving, tithing especially, is one of those math equations that just don’t work. The more you give, the more you seem to get. Don’t ask me why. It’s simple fact faith.
Yes, God rewards you for your tithing and charitable giving.
And so does the government.
You can deduct your tithes, offerings, charitable donations on your tax return.*
(*NOTE: You can only deduct them, if you have enough contributions, along with other things such as mortgage interest, to qualify you for taking itemized deductions over the standard deduction. Not sure? Ask a professional.)
This is one of those deductions that completely rely on your honesty. You could put down that you donated $7,000,000 to charity. Unless your income is well over 8 figures, I wouldn’t recommend that.
But how do you prove what you gave?
1. Give by check. If I can give you one single piece of advice, this would be it. GIVE by check. You can easily get a copy of that check if you would need it. Plus, it helps the organization you gave to be able to track the donation.
2. Ask your church/charity to provide you with a year-end statement with the total that you gave.
Keep in mind that, never, not once, ever, has the statement that I received from a church been correct, so double check it. Often times, they may leave out special offerings, fund raisers, etc. that are deductible.
3. Make sure your donation is eligible for deduction.
Even though you make think your local booster club is a “charity” they may not have applied for “501(c)(3) status.” A 501(c)(3) organization has been recognized by the government as a bona fide tax-exempt organization. If not, a donation to them is not tax deductible for you, and is actually taxable income to them.
Not sure? Check here. All 501(c)(3) organizations (other than churches) are listed there. (Churches are inherently tax exempt, unless they make a big boo-boo.)
4. If you do give cash, if it’s over $250 get a receipt or put it in an envelope with your name on it. Otherwise, there is no proof of it. No proof equals no deduction. If it’s less than $250, I would still recommend one of the above methods, but at least keep a note with the date and the amounts.
5. If you donate to a fundraiser for a bona fide organization, some of that may be deductible. Say you bought a pizza for $20, and that pizza retails for $5. You can deduct $15. In other words, you can deduct the excess of what you paid from what it’s worth.
6. If you donate items, get a receipt!!! No matter the amount. If not? See #4.
If you give at all during the year, I would recommend keeping track. Every $100 you give, means $25 back in your pocket. (Assuming a 25% tax bracket.)
Although you may not think it’s much, every little bit makes a difference to that charity and on your taxes.
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