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Tax Benefits of Charitable Giving

August 10, 2023

Giving has the power to change lives. No matter how big or small the donation, every dollar makes a difference, from giving a child the opportunity to go to school to feeding a family in your neighborhood. Client 1st Financial encourages clients to include charitable giving in financial plans to benefit the community. However, it is important to note that charitable giving can also benefit you through tax deductions. 

By donating to an IRS-approved nonprofit, you may be eligible for a tax deduction of up to 60% of your adjusted gross income. To claim tax-deductible donations on your tax return, there are a few steps you must follow. First, you need to ensure that your cause is a qualifying organization. Then, you need to collect documentation of your donations, whether this be a bank statement, credit statement, or receipt directly from the charity. Lastly, you need to itemize your deductions in order to claim your tax-deductible donation. 

As previously mentioned, if you wish to benefit from your charitable donation, you must select an IRS-approved nonprofit. We also encourage clients to find an organization that is meaningful to them. This way, they can feel a sense of personal fulfillment and make an impact they are proud of. Additionally, we encourage volunteering with an organization of your choice to see your dollars making a difference. 

Although you cannot deduct the value of your time spent volunteering, you may be able to deduct your expenses related to your volunteer work. For example, by documenting your mileage driving to and from your shifts and saving your receipts, you may qualify for a tax deduction. Therefore, you should not let distance deter you from getting involved with an organization you hold close to your heart. At Client 1st Financial, we value your charitable interests. By providing insight into these potential tax benefits and more, we hope to support the causes that matter to you.