How You Can Maximize Your Tax-Deductible Donations

Giving to charity is among the best things you can do, and as a bonus, it can help with your tax bill. You might not know this, but a tax-deductible donation allows you to deduct some cash or property then transfer to a qualified organization. A qualified organization can be a nonprofit religious, charities or educational groups.

To know if the organization you intend to donate to is tax-exempt, be sure to search the IRS Organization Search Tool. That being said, below are some of the most effective ways to maximize your donation tax relief without going overboard.

Donate Stocks

If you’re not into donating cash to organizations, you should consider giving out stocks. But be sure to determine if the charity you want to donate to has a brokerage account that’s set up to accept your donation. Stocks are probably great to donate as you can’t pay any capital gains while donating them. When you sell stock at a gain that you’ve held longer than a year, you will obviously have to pay capital gain taxes.

Also, you can donate stocks through your investment broker. However, you need to be aware that this is a common strategy that is mostly done at the end of year so you should never leave it until the last minute. Plus, stocks donations also require some paperwork to authorize it.

Bunch Your Donations

To make the most out of your donations and maximize your donation tax relief, why not leverage the bunching strategy. The good thing with bunching is that it allows you to stack your gift-giving in a tax year. Maybe you’re single and would like to give 20,000 annually to your favorite charity. But since you don’t have any other itemized deductions, donating out 20,000 wouldn’t qualify you to claim the full donation as an itemized deduction.

No wonder you should sometimes consider bunching strategy when donating to an organization. With the bunching strategy, you can give out a certain amount in one month like January then give the same amount of money on December. Through this action, you will have an easy time claiming the whole amount of gift you’ve given out in those two months as an itemized deduction on your tax return.  Bunching strategy in donations can as well reduce your taxable income.

By employing the above and other tips, rest in knowing you stand a better chance of maximizing your donation tax relief without the hassle.

The Media Post
The Media Post
I'm a blogger with a love for discovering new facts. I've been writing about my adventures for the past 5 years and have built a following of various niches who are always looking for their next great experience. I'm passionate about sharing my favorite topics for experiencing the best information.

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