The overwhelming disaster caused by Typhoon Haiyan is heartbreaking. The ongoing needs are huge, and individuals in our firm are donating money to relief organizations. We encourage you to make charitable donations to help people in the Philippines if you can.
When you donate, let the government help you with your gift. Make your donations to an IRS-recognized charitable organization. That way your gift is tax deductible.
If you itemize your deductions, depending upon your overall income level, over 49% of your gift could be “paid for” by state and Federal governments in the form of lower taxes owed. Figure it out: if you’re in the 39.6% Federal tax bracket and the 10.3% California state bracket, and if you give $10,000 to a qualified charity, you will have to pay $4,900 less in combined taxes. Of course this is just general information and your situation will be different if you’ve reached the maximum charitable deduction level, if you’re barely in the top brackets, and other specific circumstances.
Still, if you itemize your deductions, your gift is likely to be subsidized by a reduction in taxes owed. But, only if you give intelligently.
Make sure that you give to a charitable organization recognized by the Internal Revenue Service. When the disaster is domestic, targeting your money isn’t a problem. If you want to help this week’s tornado victims, there are many local, state, and national aid organizations helping out, and the IRS knows about them.
But, for international disasters, for the most part you should give to the US-based branch of a relief organization. If you help typhoon victims and give directly to a great charity in the Philippines your money will provide much needed help, but you cannot get a tax deduction for your gift if the IRS hasn’t certified the charity as eligible to receive tax-deductible contributions.
The law allows you to deduct your gift only when you give to an IRS-recognized, US organization.
If you’re not sure if your selected recipient is recognized by the Feds, search the IRS’s list of approved charitable organizations online.
Figure out how much you can afford to give, and set your budget. Look up your marginal tax rate to see how much the government will be helping with your gift. Then, how about adding to your gift the amount of tax help you’ll be getting so you truly give the amount in your budget. Let the government help you help people in need!
There are many great organizations rushing supplies to areas that need immediate AND long-term help. One list of aid groups is online at InterAction. Give! And, let the government help with your donation.