With tax season quickly approaching, taxpayers often seek last-minute strategies to reduce their obligations to the IRS. For returns with itemized deductions, one means to accomplish this goal involves end-of-year charitable giving.
According to a Nov. 2016 <a href=”https://wallethub.com/edu/most-and-least-charitable-states/8555/”>WalletHub survey</a>, Utahns are already well-acquainted with contributing money to charity. In fact, WalletHub ranks Utahns first in the nation in making charitable donations.
Contributing to a nonprofit organization can provide both tax benefits and altruistic rewards for the benefactor, and donations made at year’s-end can help a charitable organization tremendously. Given the increased demands placed on nonprofits during the holidays, Kate Rubalcava, CEO of the Utah Nonprofits Association (UNA), strongly encourages December giving.
“Nonprofit organizations in Utah and most of our charities at this time of year are experiencing great need,” she said. “There are so many people within our community that are seeking services, so it’s really important to consider giving to nonprofits.”
UNA’s mission is to strengthen, unify and elevate charitable organizations throughout Utah, and it currently has more than 600 nonprofit organizations listed in its <a href=”https://utahnonprofits.org/index.php?option=com_civicrm&task=civicrm/profile&force=1&gid=22″>membership directory</a>. Seventeen of these are based in Cache Valley, with emphases ranging from arts, culture and the humanities to human services, animals and the environment. With so many options, selecting the “right” organization to support may seem like a daunting task. As a result, narrowing the many choices becomes a personal decision.
“Choosing a nonprofit to support this holiday season and throughout the rest of the year is really quite simple,” Rubalcava said. “It’s really important to have a conversation with your family and with your loved ones and really talk about the things that are important to you at home—what your values are and the ways that you would like to engage and interact with nonprofits. Once you can have that conversation and really hone in on the reason you want to give throughout the year and especially during the holiday season, then you can go out and find a nonprofit organization that most aligns with your family values and with whatever you are hoping to address.”
Once a cause to support has been identified, Rubalcava advises potential donors to research agencies with that particular specialty and choose one that meets state and federal requirements for charitable giving.
“The other part of giving is that you really wanna make sure that your dollars are going to a good organization,” she said, “one that is making sure they’re adhering to all the rules and regulations through the State of Utah and through the IRS.”
Several resources are available to vet specific agencies, including <a href=”http://www.consumerprotection.utah.gov/”>the Utah Department of Commerce’s Division of Consumer Protection</a> and <a href=”https://utahnonprofits.org/index.php?option=com_civicrm&task=civicrm/profile&force=1&gid=22″>UNA’s membership directory</a>. The IRS also provides a tool called <a href=”https://apps.irs.gov/app/eos/”><em>Exempt Organizations Select Check</em></a> to help taxpayers evaluate a charitable organization’s federal filing status to determine the deductibility of contributions. Once the determination is made that an organization is eligible to receive tax-deductible donations, supporting it financially becomes a mutually beneficial decision.
“End of year giving is really a win-win for nonprofit organizations and for individuals and families,” said Rubalcava. “What’s so great about running a nonprofit organization is that we get to see the best parts of our community this time of year. So many people want to come out and help and provide assistance, whether they give their money, their time, and their talents. They’re really there to help out in any way they can, and it really helps out organizations with their bottom line and to serve the missions of their organizations.”
“What it also does on an individual and a family basis,” she said, “is it gets to show families and kids and people of all ages how important it is to invest in their communities and to give back to organizations and really gets at the heart of why we give and why we care about our neighbors.”
As for the tax deduction donors receive? Rubalcava offers a practical perspective.
“End of year giving can really help in that way, too.”
In addition to making charitable contributions, TurboTax offers <a href=”https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/Top-8-Year-End-Tax-Tips/INF12120.html”>eight year-end tax tips</a> to help increase 2016 tax breaks. Among these are deferring income, making maximum contributions to Individual Retirement Accounts and selling “loser” investments to offset gains. In order to qualify for the 2016 tax year, all action must be taken by Dec. 31.