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Count Your Blessings — and Share Them!

By Terry Savage on December 28, 2022

The shopping rush is over, and holiday dinners digested. This is a perfect time to sit back and count your blessings. And share them!
Expressing gratitude for your own blessings does not mean that you don’t have any problems — whether financial, emotional, or family. Everyone does. But if you have the luxury of reading this newspaper column in a peaceful setting, you are way ahead of millions of others who may be shivering in the cold, hiding to avoid bombs in a modern European country, or simply lonely.

What can you do to share the good feelings in your life? It’s not only a financial question, though this column revolves around personal finances. Perhaps inviting a neighboring senior or a child into your home for an afternoon would mean more than a check to a charity. Noticing a stray dog or cat in your neighborhood and setting out food will do amazing things for that one living being. And if you hesitate to give a few dollars to a homeless person on a street corner – how about offering bag of fast food.

None of those examples is about money. But the difference they make is priceless. And now, on to financial giving in this season – and some tips on how to do it wisely.

Charitable Giving Rules
Giving cash makes you feel good — whether it’s a few dollars in a Salvation Army bucket or contributing to a GoFundMe campaign for a family left homeless by fire or windstorm. But there’s no deduction for gifts that are not made to a Federally recognized charity, and without a receipt.

Maybe you don’t need the deduction. Last year (tax year 2021) you were allowed to deduct up to $300 in legitimate contributions even if you didn’t “itemize” on your tax return. This year, you can only deduct charitable contributions by itemizing deductions, providing receipts, and using Schedule A to report those deductions.

But with higher “standard deductions” and lower limits on the deductibility of state income taxes and property taxes, fewer people file an itemized return. For 2022, the standard deduction is $12,950 on a single return and $25,900 for married filing jointly. (Those amounts increase for 2023 returns to $13,850 and $27,700.) Last year, an estimated 90% of filers used the standard deduction instead of itemizing.
Tax deductions aren’t the only reason for giving, of course. But if you are giving substantial amounts, you might as well get the deduction if it improves your tax picture.

Special Ways to Give
Perhaps you had a great income year in 2022 and want to be generous, as well as claiming a tax deduction. You’re not so sure about what 2023 will bring. Solve that problem by creating your own “charitable foundation” and making one large gift this year to claim the tax deduction on the return you’ll file in April. But you can delay distributions to future years, giving the money in your foundation time to grow tax-free in the stock market. These “donor-advised charitable gift funds” are available at most major mutual fund companies, with little paperwork to establish the account. But you must fund it before year-end to get a tax deduction for 2022.

Seniors who are subject to Required Minimum Distributions (RMDs) from their IRA accounts, can also avoid taxes on this annual distribution, by directing that a contribution from the IRA (up to $100,000) be made directly to a recognized 50l(c)3 charity. Again, that distribution must be made by year-end. But if you’ve already taken your 2022 RMD, consider that option as part of your distribution plan next year.

Investigate the Charity
Charities make heartfelt appeals for funds at this time of year, many of them enticing you with promises of matching contributions from large donors. If you don’t know the charity don’t fall for the pitch without checking their rating at CharityNavigator.org. This group rates each charity’s expenses and use of funds. And, if you are feeling generous but don’t know where your contribution will do the most good, they offer suggestions based on causes ranging from helping Ukrainian people to funding legitimate animal welfare programs.

The biblical expression in Acts says that it is more blessed to give than to receive. It is especially true this holiday season, so don’t forget to act on your good intentions. And that’s The Savage Truth.

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