5 Mistakes To Avoid When Donating To Charity This Year

The holiday season is a time for giving, and many people choose to donate to charity as one of their gifts. However, if you’re not careful, you could end up making some mistakes that could hurt your donation dollars. In this post, we will discuss 5 mistakes to avoid when donating to charity this year. Read on to learn more!

Mistakes To Avoid With Year-End Charitable Donations

As the year comes to a close, many people look for ways to reduce their tax burden by making charitable donations. However, it’s important to avoid making common mistakes that could jeopardize the deductibility of your donations. Here are five mistakes to avoid:

#1 Donating To An Unqualified Organization

  • One charitable giving mistake to avoid is donating to an organization that is not qualified to receive tax-deductible contributions. To be able to claim a deduction for your charitable donation on your taxes, the IRS must qualify the organization.
  • To do this, they take into account several factors, including how the organization uses its funds and whether it engages in political activities. As a result, donating to an unqualified organization not only means that you will not be able to claim a deduction for your donation, but it also means that your money may not be going to a worthy cause.
  • Before you make any year-end charitable donations, be sure to check that the organization is qualified to receive tax-deductible contributions.

#2 Failing To Get A Receipt

  • One year-end charitable donations mistake that you should avoid is failing to get a receipt. When you donate to a qualified organization, you should always request a written acknowledgment of your gift.
  • This acknowledgment should include the amount of the donation and a statement indicating whether or not the organization provided any goods or services in exchange for the donation.
  • If the organization did provide goods or services, the value of those goods or services should be excluded from the acknowledgment. Without a proper acknowledgment, you will not be able to take a deduction for your donation on your tax return. So, before you make your final charitable contributions for the year, be sure to get receipts for all of your donations.

#3 Overstating The Value Of Donated Property

  • As the end of the year approaches, many people look for ways to reduce their tax liability. One common way to do this is to make charitable donations. However, it is important to avoid making certain mistakes when claiming these donations.
  • For example, overstating the value of the donated property is a mistake that can come back to haunt you. The IRS has strict rules about valuing donated property, and if you overstate the value, you may be subject to penalties.
  • It is always best to err on the side of caution and consult a professional appraiser if you are unsure about the value of your donated property. By taking a few simple precautions, you can ensure that your charitable donations go smoothly and help you reduce your tax liability.

#4 Failing To Keep Records Of Cash Donations

  • One of the biggest mistakes people make when it comes to charitable donations is failing to keep records of their cash donations. While it may seem like a small thing, it can have a big impact come tax time. If you don’t have receipts or canceled checks to show for your donations, the IRS will likely disallow them.
  • As a result, you could end up paying more in taxes than you would have if you had just taken the standard deduction. So before you give any money to a charity, be sure to get a receipt so that you can deduct it from your taxes.
  • It’s also a good idea to keep track of all your donations in a dedicated notebook or on your computer so that you don’t forget anything come tax time. By taking a few simple steps, you can ensure that your charitable donations go as far as possible.

#5 Making Late Contributions

  • As the end of the year approaches, many people begin to think about making charitable donations. However, there are a few things to keep in mind to ensure that your donation has the maximum impact.
  • One mistake that many people make is waiting until the last minute to make their donation. This can cause two problems. First, it can be difficult to find a reputable charity that is still accepting donations at such a late date.
  • Second, and more importantly, Waiting until the last minute means that your donation will not be eligible for a tax deduction. So if you’re considering making a year-end charitable contribution, be sure to do it early to maximize its impact.

Conclusion

The bottom line is that if you want to make a donation to charity and get a tax break for it, there are some things you need to watch out for. But as long as you avoid these common pitfalls, donating can be a great way to reduce your taxable income. So before the year ends, take some time to think about which charities you’d like to support and make sure you do so in a way that will maximize your tax savings. Thanks for reading!

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