Many people in the Mid-Columbia region donate to their favorite charities, especially during the holiday season.
It feels good to help the less fortunate.
But why not help yourself too by getting tax credits for giving?
Darren Szendre, a certified public accountant and owner of Tri-Cities Tax in Kennewick, believes in the spirit of giving.
“You should give regardless of whether you can deduct or not,” said Szendre, who is involved in many charitable organizations and serves as president of the nonprofit Trios Foundation. “The Tri-Cities has so many excellent charitable groups. They do a good job of keeping their costs low. We have excellent charities that do a great job with that.”
Todd Peck agreed. He’s a CPA and tax manager at Account Sense in Kennewick.
“People donate to charity because it makes them feel good,” he said. “Most people I’ve dealt with donate to charity first. They say ‘I’m going to give to these charities.’ Now, is it nice to get a tax benefit doing that? Absolutely.”
While it’s too late to donate and get credit for 2016 tax returns, donations made through the end of this year will count for 2017 taxes.
“You can give up to the last day of the year, as long as you get the documentation for it,” said Peck. “Get some kind of receipt.”
But planning for the 2017 tax season is a pretty good idea, especially if you’re going to be donating to charity.
“For 2017, try to have an idea of how much you want to give,” Peck said.
And find the right charitable fit.
“Research your charities,” Szendre said. “Make sure it’s the right fit for you. And keep track of your donations to your charity. Get the documentation from that charitable organization.
“And make sure the charity is a qualified 501c3 organization. You can check those online. I try to keep things local. There is a published list of qualified organizations.”
Both Peck and Szendre agreed the key is to itemize what you donate.
According to an Account Sense publication, you can deduct the full amount of contributions you make to a charitable organization that qualifies, up to 50 percent of your gross adjusted income for the year. If you made a rather large donation, you can carry the excess forward for up to five years. Just get written acknowledgement from the charity for monetary gifts of $250 or more.
“Itemizing. It goes along with sales tax, your home taxes, etc.,” Peck said.
There are other ways to donate charitably, according to Account Sense:
• This for that gifts: Of more than $75 entitle you to receive goods or services in return.
• Gifts for your time: Meaning out-of-pocket expenses (long-distance travel, lodging, local transportation).
• Gifts of property: Up to 30 percent of your gross adjusted income. It can carry over for five years. You’ll need an independent appraisal for gifts over $5,000.
Szendre has seen other optional charitable giving avenues.
“One of the things people do, they’ll bunch up their donations —they’ll do $10,000 of tithing in 2016. They may also know they’ll do $10,000 of tithing in 2017. So they’ll bunch it up if they have the means to do so,” Szendre said.
Check into programs about giving to your favorite college or university.
“There are a lot of cool programs through universities,” Szendre said. “Oregon State University used to have a charitable program … where you donate and get state income tax credits.”
Be sure to also check with your employer. They may have a program where they could match your donation to a charity.
And don’t forget hard goods donations, one of the biggest avenues of giving.
“Hard goods that maybe are going to Goodwill, Salvation Army, Grace Clinic, other places, is another example,” Szendre said. “People give beds, blankets, infant items.”
Szendre said the IRS has tables on its website to help you get the value of items donated.
“There’s no substitute, when you’re talking about hard goods donations, for good documentation,” Szendre said. “When you’re donating $2,000 to $3,000, you definitely want a list of what’s being donated, pictures of things. And get a receipt.”
So when you’re thinking about the 2017 tax season, remember to sit down with your CPA and do some planning – including charitable giving.
Most people give out of the goodness of their heart.
But it just makes sense to save money on your taxes too.
“I would say 85 to 90 percent of the people we deal with give to charity. And they itemize,” said Peck.
“And you’re giving, which is cool,” said Szendre. “But it’s also allowed for federal tax credits. So why not do it?”