Donating to a non-profit organization can offer several tax benefits, including:
Charitable Deductions: Contributions to eligible non-profits are tax-deductible. You can itemize your deductions on your tax return and reduce your taxable income, potentially lowering your overall tax liability.
Capital Gains Tax Savings: Donating appreciated assets, such as stocks or real estate, can help you avoid capital gains tax. Instead of selling the asset and paying taxes on the gain, you can donate it to a non-profit and receive a deduction for the asset’s fair market value.
Estate Tax Benefits: Charitable donations can reduce the size of your taxable estate, potentially lowering estate taxes for your heirs.
Qualified Charitable Distributions (QCDs): If you’re 70½ or older and have an individual retirement account (IRA), you can make QCDs directly to a qualified non-profit. These distributions can satisfy your required minimum distribution (RMD) and are not included in your taxable income.
State Tax Benefits: Some states offer additional tax incentives for charitable giving, such as credits or deductions.
It’s important to keep records of your donations, including receipts and acknowledgments from the non-profit, to substantiate your deductions. Additionally, tax laws can change, so consulting with a tax professional or financial advisor is advisable to maximize your tax benefits while supporting charitable causes.