Letter from the desk of Regina Lindsey (December 2017)

It is that time of year. We have all finished the turkey at Thanksgiving, survived Black Friday, decorated the house for Christmas, and your mailbox and e-mail is being inundated with request for charitable giving to local nonprofits. Why do appeals increase at year’s end? Because the year-end holidays are a time of religious and moral reflection that inspire many people to reach out to those who are less fortunate. Less altruistically but still important, donors need to make their end-of-year giving decisions by Dec. 31 to qualify for a tax deduction in this calendar year. Knowing that, charities increase their solicitations, and an increase in charitable giving occurs between Thanksgiving and New Year’s.

In fact, nearly 31 percent of all giving happens in Dec. with 12 percent occurring in the last three days of the year, and 28 percent of all nonprofits raise 26-50 percent of their entire organization’s budget from their end-of-year ask.

If you are interested in lowering your tax burden for the year and doing something good in your community, there are some ways you can assist. The most obvious, of course, is to write a check to the organization. However, only donations to qualified charitable 501(c)(3) organizations are deductible. If you are not sure whether an organization is qualified, ask to see their letter from the IRS (many organizations will post their letters on their website). If that is not possible, you can search directly online using IRS Publication 78. Keep in mind that churches, synagogues, temples and mosques are considered de facto charitable organizations and are eligible to receive deductible donations even if they are not on the list.

Cash deductions, regardless of the amount, must be substantiated by a bank record (such as a canceled check or credit card receipt, clearly annotated with the name of the charity) or in writing from the organization. The writing must include the date, the amount and the organization that received the donation. Cash deductions that are not substantiated, such as a cash donation without a receipt, or donations made directly to an individual rather than a qualified charitable organization, will be disallowed. If you have money taken out of your paycheck for charity, be sure to keep a pay stub, a form W-2 or other document furnished by your employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity. If you make a cash donation to a charitable organization, check with your employer to see if there is an existing employee match program to maximize your donation.

Secondly, donating personal property is an option. For donations of non-cash items, the rule is that you can generally take a deduction for the fair market value of the items – what the item would sell for in its current condition. Be specific when you document your donation, noting the description and condition of the items. However, if you make non-cash deductions of used clothing and household items, they are only deductible if in good condition or better.

The rules for the donation of a car, truck, other motor vehicles, boat or airplane are a little different. Rather than use the fair market value of the donation, you are generally limited to the gross proceeds from its sale if the value of the item is more than $500. You will need to get a form 1098-C, or a similar statement, from the charitable organization and attach it to your tax return. If you have stock that has grown in value, you can donate it and receive a charitable deduction for the current value as well as eliminate capital gains tax on the appreciation.

Alternatively, make a gift of real estate (either the entire property or a portion of it), and you will receive a charitable deduction for the current value as well as eliminate capital gains tax. Keep in mind that gifts of stocks or other securities may take two to three weeks to process at year-end. If the amount of all of your non-cash contributions is over $500, you must also submit a form 8283, Noncash Charitable Contributions, with your tax return.

If you are interested in making a charitable donation before the end of the year, there are some ways the Chamber can be a resource. First, consider the Beaumont Chamber Foundation, a 501(c)(3). Your donations will assist with numerous leadership programs for our area’s youth, young professionals, and future leaders. Further, the Chamber has a number of nonprofit organizations as its members. Depending on your focus, we can help identify nonprofits working in your field of interest for donations.