While December may signal snow, Santa and the inevitable countdown to the NFL playoffs, it’s also the time to consider giving to receive, as in a tax deduction.
Even if you love the holidays as much as anyone, and often find yourself stuffing dollar bills into bell ringer’s kettles, be practical: January 2015 is looming. Soon after Rudolph’s red nose fades away, it will be time to tackle the dreaded tax return. And one way to ease the pain is to maximize your deductions. This late in the game, the easiest way is by making donations to your favorite nonprofits.
So how do you get at year’s end?
Start by ensuring that you give to a qualified organization, recognized by the Internal Revenue Service as a 501(c)(3). That means the group has jumped through all the proper governmental hoops and files the proper annual paperwork. You can also check out a charity on give.org, the Better Business Bureau’s Wise Giving Alliances website.
Also, you must itemize your donations on Schedule A of the 1040 form. “For every dollar you list as a charitable donation, you get an equal dollar deduction,” says Denver-based CPA Ann Hinkins, who works with nonprofit organizations.
If you have non-cash assets such as stock or land that have greatly appreciated in the last 12 months, you are able to donate them at fair market value and don’t pay the year’s capital gains. For example, say you paid $1,000 for stock that is now worth $5,000. You can donate it, deduct the current $5,000 value and avoid paying capital gains earned in 2014.
Another way to boost your donation is through matching dollars or similar incentives. Check with your employer to see if it has a matching gift program. Season To Share, run by Denver Post Charities and the McCormick foundation, match every dollar donated at 50 percent. Colorado Gives Day, held this year on Dec. 9, also has an incentive fund to boost contributions.
Now you need to find a nonprofit.
Or two. Or three. “People want to give, but often don’t know where or how to,” says Dana Rinderknecht, director of online giving for the Community First Foundation, which runs Colorado Gives Day.
If you want to really feel great about your gift, look for nonprofits that match your passions and interests and are located in your zip code, she advises. Websites such as , and can help you evaluate a charity’s legitimacy and compare various charities.
ColoradoGives.org has vetted more than 1,600 area nonprofits and summarized their programs and financials. You can find out how many people they serve; you can even drill down by interests such as rescue dogs or food banks.
Want credit for every charitable gift? It’s all about the paperwork. That includes those blank receipts for goods dropped off at places such as the Salvation Army or ARC Thrift and grocery-store receipts if you buy nonperishables to give to charities.
When you give online, save and/or print the confirmation e-mail for your tax records. “Keep a file throughout the year,” says Hinkins. “It doesn’t have to be fancy, but no matter how you contribute, cash or check or goods, get a receipt and toss it in. To work backward is painful.”
More tips from the IRS:
If you volunteer at a nonprofit, you can deduct the mileage at 14 cents per miles plus parking.
If your contribution entitles you to merchandise, goods or services, including admission to a charity event, performance or sporting event, you can only deduct the amount that exceeds the fair market value of the benefit received. So if you pay $100 for a seat at a charity dinner valued at $60, you can only deduct $40.
Make sure all receipts or thank-you letters contain the name of the organization, the contribution date and amount. For a text-message donation, such as those that pop up after natural disasters, it’s OK to use your telephone bill as long as it shows the name of the organization, the date and the amount given.
If your total deduction for all noncash contributions during the year is more than $500, you must complete and attach IRS Form 8263, the Noncash Charitable Contributions form, to your return.
Finally, make any donation by midnight Dec. 31. If you make a good faith effort with a postmark a few days before year’s end, you can claim the donation on your 2014 taxes even if the check doesn’t clear in 2014 (be sure, though, not to claim it in both years).
If you like to wait until the last minute, go online. Most nonprofits have websites that allow you to donate instantly.
Two ways to give local
Colorado Gives Day starts at 12 a.m. Dec. 9. The idea is to make it easy for Coloradans to “give where you live” through ColoradoGives.org. The year-round website lists more than 1,600 Colorado nonprofit organizations and makes it easy for users to find charities that match their interests. Choose the ones you like, fill up your giving cart and make one transaction. You can even schedule your donation in advance.
As an extra incentive to donors, every dollar received is boosted through a $1 million incentive fund. Each nonprofit organization receives money from the fund based on the percentage of donations received on Colorado Gives Day. So if a charity receives 5 percent of the total donations made on that day, the charity gets 5 percent of the $1 Million Incentive Fund. In 2013, the program distributed $20.9 million to Colorado nonprofits.
Season to Share’s donation drive for Colorado nonprofits and community agencies continues through Jan. 31, 2015. The McCormick Foundation matches each donation 50 percent, and Denver Post Charities and the foundation donate the administrative services to run the drive. Read more or donate online at at denverpost.com/seasontoshare
