Tips for Giving Back this Holiday Season
There are many worthy causes to support as well as a number of ways to support them. If you’d like to give to charity this year, now is a good time to think about where you’d like to make an impact with your donations. If you have younger children, there are some fun ways that they can join you in giving back. Many of these activities are tax-deductible as well, though there are some rules around what can and cannot be deducted to comply with the IRS rules and regulations.
Good for children and teens:
Volunteer for an organization your family supports.
Some groups may have age minimums for the little ones, but this is a great way for your family to see how important it is to give back to the community. In addition, it’s time that you can all set aside to spend together, especially during a busy holiday season. Volunteer time is not tax-deductible.
“Adopt” a family from a local shelter or military association.
Your children may enjoy shopping for other kids, especially if they are of similar ages. There’s usually a variety of items on the wish list, from toys and games to books and clothing. As long as the organization overseeing the program is a charity or qualified group (see IRS Exempt Organization Select Check), the amount you spend is tax-deductible.
Other ways to give (to qualified entities):
Donate cash to an organization you support.
Cash is often better than goods, even for local shelters. They can buy food at a much lower cost than individuals see at the grocery store. In addition, they know what foods their clients prefer and know how to prepare, so a cash donation instead of a canned food drive may be more useful to them. As long as you have a record of your donation being made on or before 12/31/16, you can deduct the amount on your 2016 tax return.
Donate appreciated stock.
When you gift stock, you can deduct the fair market value on your tax return. If the cost basis on your stock is low (the stock has appreciated since you’ve owned it), by gifting it to charity, you avoid the capital gains tax you would otherwise pay if you sold the stock. In this way, you receive tax benefits from the deduction as well as the avoidance of capital gains tax. Smaller, local organizations may not have the capability to accept appreciated stock as a donation, but most of the larger, national groups do.
Donate household items and vehicles.
This one can be a family affair if everyone is decluttering at once, though remember clothes and household items need to be in good shape to deduct the fair market value of your items on your return. You’ll need IRS Form 8283 if the value is over $500. Vehicles can be deducted at the sales proceeds amount, and if that amount is over $500 you’ll need Form 1098-C or a similar statement from the charity in order to deduct it.
If you’re interested in setting up a program of gifting, whether it’s to charity or family or both, speak to your adviser to help you determine the right way to do so. In addition to the options already mentioned, there are special charitable vehicles that can be discussed to facilitate your giving.