The holidays are upon us and so is the season of giving gifts! While the COVID-19 pandemic has changed many things for all of us (hello, social distancing), we don’t have to say goodbye to charitable gifting. Our financial advisors are here with the do’s and don’ts of charitable gifting, so you can support your favorite charities while also supporting your bottom line.
Do: Get Jolly and Take Advantage of This Year’s $300 Deductible
Although the days of benefitting from itemizing your deductions are gone, there is a benefit you can still get jolly about! Thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act, if you opt for a standard deduction rather than itemizing, you can deduct up to $300 of cash contributions made to eligible organizations.
Don’t: Give to Charities Without Making a List and Checking Their Validity (Twice)
When it comes to gifting your hard-earned money to charity, it’s crucial that you make sure it’s a legitimate organization. Not only do you want to avoid wasting your money, but only organizations that have a 501(c)(3) tax-exempt status will ensure that you get a tax break for your monetary gift.
Do: Be Nice to Your Finances and Keep Track of Your Giving
Between the stress of the coronavirus pandemic, purchasing gifts, and navigating the usual hustle and bustle of the holiday season, it can be easy to lose track of the charitable donations you make—but you don’t have to! In fact, by keeping a spreadsheet of every charity you’ve donated to—and how much of a donation you made—you can easily track your charitable donations. Plus, your life will be that much easier when it’s tax season.
Don’t: Be Naughty and Give More Than You Can Afford
It’s easy to get caught up in the festiveness of the season and over do it when it comes to giving to those in need, and while we FULLY support making charitable donations, we also support keeping your finances on track. Because of this, creating a budget is key in determining how much you can afford to donate to charities every year. This budget should include:
· Mortgage payment/Rent
· Monthly expenses (cable, internet, utilities, etc.)
· Food (groceries, dining out, beverages, etc.)
· Transportation expenses (car payment, car insurance, gas, etc.)
· Monthly contributions (401(k), 529 plans, Roth IRA, etc.)
Do: Make Your Presence Known with the Charities You Support
While supporting charities with monetary gifts every holiday season is great, you should also try to make it a priority to volunteer at the charities you donate to. This gives you the opportunity to get to know the people who work at the organization that much better while also giving you more in-depth knowledge about the cause they’re serving, so you’ll feel that much better about donating money every year to help drive its mission.
Don’t: Get Wrapped Up in Giving Your Financial Information Without Research
These days, many of us turn to the internet to shop and donate, and although it’s extremely convenient, it can also put the safety of your financial information in jeopardy. So, if you find yourself making a number of charitable donations online, be sure to avoid giving out your credit card or debit card information to organizations you don’t know. If you prefer to donate via a check, this same rule applies!
Now that you know the do’s and don’ts of charitable gifting during the holidays, let our financial advisors here at Creative Financial Planning help you make the most of your gift giving! Contact us today to speak with one of our financial planners.