The holiday season is in full swing, which means you might find yourself in a giving mood. Not only does donating to a charity boost your own morale, but it could even help you and your business out on your tax return. Read on to see how your kindness goes even further than you may think.
Here are some ways your donations can help you financially:
If you donate things such as real estate, stocks or bonds to a charity, you most likely will not have to pay capital gains, and you can take a deduction for the full fair market value.
If you donate to a qualified organization through your business, you may be allowed to take a deduction on your taxes. For example, paying a nonprofit organization so you are published in their directory may qualify as an advertising expense. Since the tax rate is applied to your reduced income amount, your tax liability is ultimately minimized. One way to claim a larger deduction is to bunch multiple years’ worth of giving into one year in which your income was higher, and then those funds can continue to support charities over time. Individuals can also claim a deduction for charitable contributions, but only if you itemize your deductions.
The federal estate tax taxes the transfer of your property once you pass. By structuring your donations, you can remove assets of your home over time before your total estate’s value is calculated and taxed. It is best to consult a professional to gain a complete understanding when dealing with reducing taxes on your estate.
Besides the obvious financial benefits of giving, donating to charity can also boost your company’s morale. Generosity can help unify your employees and create a strong work environment. Happy donating!
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