Isn’t it great when you can find a real win-win? We know that term is overused, but it comes down to doing something that helps you as well as someone else, in equal measure. By that definition, giving to charity is a win-win: You can help someone in need and benefit directly from the gesture. It’s kind of amazing when you stop to think about it.
But did you know that charity donations can go beyond the basic, “I donated $X to charity Y, and I was able to claim it on my tax return”? There are so many ways to donate to charity, some of which may reflect your current situation and level of financial and emotional confidence. So, while we all may not be Confident Planners—yet—there are ways you can contribute that fit you now.
For the Day-to-Day Decision Maker
Even if you don’t have much money to spend and feel as if your income is tight, most nonprofits welcome, indeed depend on, the time and skills of volunteers. Engaging with an organization in your community is especially meaningful, because you get a firsthand look at the results you are helping to realize. For some people, this is just the boost they need to help them see beyond their circumstances and appreciate what they have. Plus, the IRS allows you to deduct certain related expenses such as transportation and travel, administrative costs, and uniforms.
For the Retirement Realist
Many Retirement Realists know they need to prepare for retirement and they tend to save a lot. Sound familiar? If you’d feel more comfortable hanging on to your hard-earned cash and putting it to work, you can donate credit card miles or points instead. Just visit the loyalty program website of your card issuer, airline, or other sponsor and find the program’s charity page. This is especially useful to you if the rewards are about to expire: Even if you donate just a portion of your points, it resets the expiration date. Unfortunately, though, this type of donation is not tax deductible.
For the Ambitious Spender
Because Ambitious Spenders place a focus on possessions, they may be overweight in stuff and underweight in retirement planning and protection. If this sounds like you, consider donating collectables, art, still-valuable electronics (or whatever you really don’t need or use anymore) to reduce your tax burden. Pro tip: get the collectables and art appraised to maximize their deduction value to you.
For the Confident Planner
Charitable giving can also play a strategic role in financial planning. Expert help is particularly valuable when donating stock, real estate, appreciated assets and other non-cash property. You may be able to donate an existing insurance policy or name a charity in your trust. Should you be very generous, keep in mind that there are limits to how much in charitable contributions you can deduct from federal taxes, stated as a percentage of your adjusted gross income (AGI). If this type of high-level planning resonates with you, make sure to check in with a financial professional to think through a strategy that can work for you.
Isn’t it great that whatever your state of financial and emotional well-being, there is always a way to contribute and get something in return? What’s going to be your win-win?
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