Tips For Charitable Holiday Giving
In 2011, two-thirds of Americans gave close to $350 billion to charity. About 80 percent of the charitable donations come from individuals. The largest recipients are religious organizations, education and needs/disaster relief groups. The average person in Hawaii gives 4.5 percent of their income to charity, compared to the highest at 10.6 percent in Utah and the lowest at 2.5 percent in New Hampshire.
There are many benefits to giving to charity, amd here are some reasons and tips to give this holiday season.
* “Where your treasure is, your heart is.” Studies show that when people give to family, friends or a charity, it increases happiness much more than in those who did not give. Helping others creates an improved sense of purpose in life. Studies also show that supporting your favorite charity through your finances, volunteer time or skill can strengthen your spiritual, physical, emotional and social well-being. It keeps you educated on issues that are important to you and helps you gain awareness of problems that we can fix. Giving to others offers a sense of contentment and inner peace!
* Tax Deductions. With the expiration of the Bush tax cuts and other tax policy reforms coming up, a good charitable giving strategy can be used to maximize financial benefits.
You can donate now to lock in tax deductions for 2012. Itemized deductions may be capped next year, reducing tax benefits to future giving. You also can deduct money spent on travel, parking and other fees associated with the charity as long as you are not reimbursed.
Capital gains tax is set to increase dramatically next year. To offset these taxes, you can donate highly appreciated assets (such as stocks or real estate) or other donations to charity.
Estate tax exclusions will potentially decrease from $5 million to $1 million. Giving to charity can reduce the taxable amount of your estate while supporting important causes during your lifetime.
A charitable trust is where you donate generously to a charity for a tax break. In a charitable remainder trust, the charity manages the trust and you get income from it. At the end of the set period, the trust goes to the charity. For a lead charitable trust, the income goes to the charity, and after a set period, the trust goes back to you or your beneficiaries. Setup a trust if you plan on giving a large amount and talk to a professional for more information.
Be careful who you give your hard-earned money to. There are more than 1.5 million charities in the U.S., some good and some bad. You want to make sure the charity serves its purpose, is efficiently managed and has low enough expenses so the majority of its money is directed toward its services and programs. Many charities are started to take advantage of a disaster to scam people who want to help. You can go to artofthinkingsmart.com for charity rankings and to learn more about charities you are interested in.