‘Tis the season to be jolly! If you’re feeling charitably inclined this time of the year, you are not alone. Surveys show that more than 3 in 5 Americans donate to a charitable organization during the last two weeks of the year.
There are many options available when it comes to giving back, whether for your local community or a large nonprofit organization. These options range from donating your time, personal belongings, or cash. Depending on the type of donation and organization, you may or may not be eligible for a tax deduction on your income taxes.
Here are some ways that you can give back this holiday season:
Adopt letters written to Santa
Each year, the USPS receives hundreds of thousands of letters addressed to Santa. Operation Santa® pairs letters from kids and families with generous people who fulfill their holiday wishes. For more information, you can visit the USPS website.
After verifying your identity, the USPS pairs you with Santa letters that have asked for various gifts. You can then help Santa fulfill the requests and mail gifts to the families for Christmas. This charitable option is not eligible for a tax deduction.
Organize a holiday food drive
Growing up, I remember my teachers encouraging students to donate canned food to food drives that were put on by the school. Whether you want to organize a food drive for your office, neighborhood, or friends, this is a great way to help your local food bank but also feed many families.
Before getting started, you should contact your local food bank to see how they work with food drives and if there are any rules about the food they accept. Feeding America has a great database of local food banks here. You can use receipts for food purchased to donate as a tax deduction.
Volunteer at a local shelter
As the weather gets colder, shelters see an increase in people seeking meals and other services. In California alone, there are over 160,000 people experiencing homelessness on any given day. You can find local shelters near you by visiting the Homeless Shelters Directory.
There are many programs available to volunteer, ranging from cooking and serving meals at local parks or shelters, to packaging hygiene bags and clothes. You may also be able to provide classes and training, such as budgeting, gardening, or playing an instrument. You are unable to receive a tax deduction for donating your time.
Donate your travel points and miles
I know you’ve been working very hard to accrue your points and flight miles, but let’s be honest, when is the last time you used them? Because of the Coronavirus, many people are at risk of their flight miles and hotel points expiring.
Miles4Migrants is a nonprofit organization that provides airfare for migrants, refugees, and asylum seekers with financial hardships. To donate your frequent flyer miles or travel vouchers, you can visit Miles4Migrants. Depending on your airline or hotel loyalty program, you may also be able to donate your points directly to one of their charity partners. Since you are not taxed on your travel points and miles, you are not eligible for a tax deduction for donating them.
Donate clothing and household items
While spring is a great time to clean your home, winter is even better to clean out your closet. If you don’t already have a “give away” pile of clothes and other items, this may be a good opportunity to go through your belongings and consider donating them.
For any contribution of $250 or more, you must obtain and keep a contemporaneous written acknowledgment (letter or receipt) from the qualified organization indicating the amount, description, and estimate of the value of those items donated. You may be able to claim a tax deduction for your charitable contributions if you itemized your deductions.
One of the most traditional and easiest ways to donate to charities is direct with cash. This can be via a check, credit card online, or actual cash. It’s important to note that if you receive any items in return, such as a gift or dinner, then your tax deduction is limited to your donation less the value of the item received.
For cash donations under $250, you’ll need either a bank record (like a canceled check) or a written acknowledgment from the charity. For cash donations over $250, you will need a written acknowledgment from the charity which includes the date and amount of your donation. You may be able to claim a tax deduction for your charitable contributions if you itemized your deductions. Under the CARES Act, you are also eligible to receive a $300 deduction for cash donations if you take the standard deduction.
There are many options available to give back this holiday season. If you would like to work with a financial planner to walk you through your options, I would love to help you!
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Disclaimer: This blog is for informational purposes only, and should not be considered advice or recommendations. All opinions expressed herein are solely those of Amaral Financial Planning, LLC, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made to another parties’ informational accuracy or completeness. You should consult your financial advisor, tax professional or legal counsel prior to implementation.