Giving generously will warm hearts
The holidays are often stressful and the frenzy of the season can get exhausting. I encourage you this year to have a different attitude: Take a step back, and think of others who are less fortunate. Giving to others and focusing on gratitude creates a healthy attitude.
It’s a fact: Scientists in the field of neuroscience have shown that reward centers in the brain light up when we give to charity. In essence, doing good feels good.
Being generous toward others can take many forms. It may be writing a check to your favorite charity or giving cash to someone locally. It can be volunteering your time for a worthy cause. It may be donating clothing to a shelter or buying gifts for a local family. It may be dropping cash into a Salvation Army red bucket. It may be buying items needed by a local shelter. The needs are endless.
Many people do not care about receiving a tax deduction for giving to charity, but some do. The tax law changes that took effect Jan. 1, 2018, did not directly change the tax deductibility for charitable giving. However, the standard deductions were raised significantly, and if a person or couple does not itemize on their tax return, they may feel they are not getting the tax deduction for their charitable gifts.
Under the new tax laws, a single person will now have a standard deduction of $12,000 and a married couple will have $24,000. (For those over 65, it’s $13,300 for single and $26,600 for married couples.)
If you plan to itemize on your 2018 tax return, I recommend always getting a receipt when giving to a qualified charity. (Qualified charities are nonprofit 501(c)(3) entities, and they may include religious organizations, foundations, and local, national, and international charities.) If a cash gift is less than $250, the IRS will accept a canceled check or bank record if you wish to claim a deduction. For amounts over $250, the charity should provide a written acknowledgment of your gift.
When donating goods such as clothing or household items, request a receipt from the charity that shows their name, address, date, donation location, and a description of the items donated.
Donor-advised funds are useful tools for investors who want to give significant amounts to charities. The donor-advised fund is a charitable investment account, which is basically a “conduit” between the investor and the qualified charities the investor selects. The investor can contribute appreciated assets from a taxable investment account (such as individual stocks or mutual funds) to the donor-advised fund, and the gain that would normally be taxed if the transferred assets were sold is eliminated.
The investor can then determine which charities to support, and the donor-advised fund will send the gift (in cash) to the selected charities. The tax deduction is secured at the time the investor transfers the appreciated asset to the donor-advised fund, and the fund sends a tax receipt to the investor each January. Donor-advised funds are available through many brokerage firms.
When considering charities, I suggest you use websites, such as charitynavigator.org and guidestar.org, for research. These websites will provide you with information about what percentage of contributions go directly to the cause, and how much is consumed by fundraising and administrative expenses.
Nicholas Kristof, of the New York Times, writes a column each December in which he recommends little-known charities that are doing excellent work. In his recent column Dec. 2, 2018, he recommends the website globalgiving.org, which allows the donor to buy a charitable gift certificate to give to a friend, relative or colleague. Kristof also recommends givewell.org, which helps donors decide where to give their donations and allows the donor to make the gift through their website.
I encourage you to give generously during the holidays. It will warm your heart and lift your spirits.
