Tax-Smart Holiday Giving: Charitable Contributions and Deductions
The holiday season is a time for generosity—and charitable donations are a meaningful way to give back. Beyond supporting causes you care about, your contributions can also provide valuable tax benefits if handled correctly. Here’s how to maximize the impact of your giving while staying compliant with IRS rules.
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1. Understand What’s Deductible
Not all donations qualify for tax deductions. To ensure your gift counts:
- • Donate to a Qualified Organization: Contributions must go to IRS-approved entities, such as 501(c)(3) organizations. Use the https://apps.irs.gov/app/eos/ to verify eligibility.
- • Types of Donations: Cash, checks, credit card payments, and non-cash items (like clothing or household goods) are deductible. Donated services or time are not deductible. However, you may deduct certain out-of-pocket expenses related to volunteering if they meet IRS requirements:
- • Expenses must be unreimbursed, directly connected to your volunteer work, and not personal or family-related.
- • Examples include supplies used for the activity, required uniforms, and transportation costs. For mileage, the IRS allows 14¢ per mile for charitable driving, a rate fixed by law and unchanged for years.
- • For volunteer travel, lodging and meals may be deductible if the trip is primarily for charitable work and not personal recreation.
- • Keep detailed records and receipts—IRS scrutiny is common for these deductions.
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2. Keep Proper Documentation
Accurate records are essential for claiming deductions:
- • Cash Donations: Keep bank statements, canceled checks, or receipts showing the date, amount, and organization name.
- • Non-Cash Donations: Obtain a receipt detailing donated items and their fair market value. For donations over $500, complete IRS Form 8283.
- • Contributions Over $250: The charity must provide a written acknowledgment confirming the amount and that no goods or services were received in exchange.
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3. Know the Latest IRS Rules
Stay informed about key guidelines:
- • Standard Deduction vs. Itemizing: To claim charitable contributions, you must itemize deductions. For 2025, the standard deduction is $13,850 for single filers and $27,700 for married couples filing jointly. If your total deductions don’t exceed these amounts, itemizing may not be beneficial.
- • AGI Limitations: Cash contributions are generally deductible up to 60% of your adjusted gross income (AGI). Non-cash donations have lower limits (typically 20–50% of AGI).
- • Qualified Charitable Distributions (QCDs): If you’re 70½ or older, you can donate up to $100,000 directly from your IRA to a qualified charity. This counts toward your required minimum distribution (RMD) and is excluded from taxable income.
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4. Timing Matters
To claim a deduction for 2025, donations must be made by December 31:
- • Checks: The postmark date counts.
- • Credit Card Donations: Deductible when the charge is made, even if you pay the bill later.
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5. Maximize Your Impact
Consider these strategies to make your giving go further:
- • Donor-Advised Funds: Contribute for an immediate tax deduction while retaining flexibility to distribute funds later.
- • Appreciated Assets: Donate stocks or other appreciated assets instead of cash. You can deduct the fair market value and avoid capital gains tax.
- • Bunching Donations: Combine multiple years’ worth of donations into one tax year to exceed the standard deduction and maximize tax savings.
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Final Thoughts
Giving during the holidays is not only a way to spread joy—it’s also an opportunity to reduce your tax burden. By understanding the rules, keeping thorough records, and planning strategically, you can make the most of your charitable contributions while supporting the causes that matter most to you.
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✅ Ready to Make Your Giving Tax-Smart?
Let AllTax Accounting help you maximize your charitable deductions and plan for year-end tax savings.
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📞 Call us at 443-406-6441 or Schedule a call below!