ROCHESTER, N.Y. (WROC) — CPA Chris Gamble from RDG and Partners discussed strategies for getting the biggest tax deduction benefit from your charitable contributions Monday during News 8 at Sunrise.
“There are a bunch of rules with regard to charitable donations,” Gamble said. “The first is a charitable donation is a gift of money or property. It could be a stock or a bond or a vehicle or expenses you might incur while performing a service for a qualified organization. Now that’s important too. Not all tax-exempt organizations that you donate to produce a charitable deduction. However, the IRS on their website has a database that you can search and confirm that you will get a deduction if you donate to that organization.”
Gamble explained that you can deduct 60% of your adjusted gross income as a charitable deduction. If you donate more than that, it will carry forward for five years and you can use the remainder up in a subsequent year. “As with anything on your taxes, you really need to be able to substantiate the deductions you claim. So with regard to charitable donations, you want to have a record that would indicate the type of donation, the date you gave it, the amount, the organization you gave it to.”
The charitable deduction is part of your itemized deductions. Gamble said you need to compare that figure to the standard deduction amount because you’re going to deduct whichever one is larger. “So if you’re claiming the standard, you will not get the tax deduction,” he said. “As part of that, you may want to consider bunching your deductions. If your itemized and your standard are close, you might want to double up in one year so that you can get the higher itemized in year one, maybe get the standard in year two and then year three you double up again. So that’s a good strategy. If you are over age 70 and a half and you’re taking required minimum distributions from your IRA, you can donate those dollars directly to a charity and then you will not have to include that amount in, which can help with other items that may be limited by your income amount. And then lastly, I’d say if you’re considering a larger donation, a donor-advised fund is an option, and what that entails is you’d make a large contribution into this account. You get a deduction in the year you make that contribution, but you don’t have to pick the charities to which you’re going to disperse the funds until a subsequent year.”
Gamble said that if you have any questions, contact your tax advisor or tax preparer so that you can coordinate things to get the most benefit out of your charitable giving.