+
How to Maximize Tax Deductions
While Making the World a Better Place
Tips on End of Year Donations
+ What you will learn:
•
How much you should give
•
How to choose charities and nonprofits
•
How to shop and give at the same time
•
Planning your giving strategy for 2015
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
Disclaimer
This is very general information and
will not apply to all people in all
situations.
Consult a tax attorney, especially if you
have complex securities transactions
this year, or large estate or real estate
assets to consider.
+
Step 1 - Figure Out Your Taxable Income
+
Income Tax Brackets and Rates
+ Step 2 – Claim the Standard Deduction or
Itemize?
+ Standard Deduction
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What can be
deducted?

Home mortgage interest

State and local income taxes or sales
taxes (but not both)

Real estate and personal property
taxes

Gifts to charities

Casualty or theft losses

Unreimbursed medical expenses

Unreimbursed employee business
expenses
+ Step 3 - Add up what you believe you will
spend by the end of this year on these
expenses.
+
Compare the Standard Deduction to
Itemized Deductions

In general, if you can itemized deductions greater than the
Standard Deduction, you will likely benefit most from
itemization.
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Step 4: Estimate Your Target
Charitable Contributions

Are you still in the same bracket if you subtract the Standard
Deduction from your income?

If you are in a close to the next bracket it is likely even more
beneficial to increase your charitable giving to itemize enough
deductions to get you into the lower bracket.
+ Itemizing to Get into a Lower Bracket

Take your estimated income and subtract the standard deduction and multiply
this with your higher bracket tax rate. This is your original tax burden.
(Est. Income – Standard Ded.) High Tax Rate = Tax Liability High

[1]
Next look at the number you already computed by adding all your deductions
together and subtracting this sum from your estimated income. Take the upper
limit income level for the lower bracket and subtract this amount from it. This is
the amount you would spend on donations to get you in the new tax bracket.
Upper Income Limit for Lower Bracket - (Est. Income – Itemized Ded.) = Donation
Amount Needed to Get into Lower Tax Bracket
[2]

Next take the upper income limit for the lower bracket and multiply it times
the lower tax rate. This is the lower tax liability. (Upper Income Limit Lower
Tax) Lower Tax Rate = Tax Liability Low
[3]

If your original high tax liability, [1], is greater than the amount of your lower
tax bracket liability, [2], plus the charitable donations amount needed to get
there [3], you should itemize and donate an amount equal to [2].
If Equation [1] > [2] + [3], give [2] to charity! It helps the world and gives you a
tax break!
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So you’ve decided to incorporate
charitable giving into your annual
financial plan!
Excellent!
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File the right forms
 To
itemize your deductions, use Form 1040
and Schedule A, Itemized Deductions.
 You
can take the standard deduction on
Forms 1040, 1040A or 1040EZ.
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Tips on Filing from the IRS

You may be eligible for free, brand-name software to prepare
and e-file your tax return. IRS Free File will do the work for
you.

Free File software will help you determine if you should
itemize and file the right tax forms. It will do the math and efile your return – all for free.

Otherwise, you may file electronically with commercial
software, or through a paid preparer.)
+ Where to start?
Now is the fun part where you match your values
and concerns with your donations.
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Look at Past Donations

Turbo Tax stores these so log in and browse last year’s
deductions if you itemized them.
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Any Issues You Care About Missing?

Make sure this year you give to nonprofits doing the work
you value most.

If you are a technical type you can pick kinds of organizations
by sector, choosing 4 and distribute evenly (25% each) or
rank them and give more to those at the top of the list (40%,
30%, 20%, 10%).
+ Choose non-profits you have worked with
and know intimately.
Do your friends work there? Are they always talking passionately about
the work their org does, consider donating to that org.
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Do you Attend Church?
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Consider Tithing

If your Parish, Church or Temple is particularly active in
service provision, putting completed envelopes in the basket
during the offertory will ensure your church has a record of
your donations.
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Give to Religious Non-profits in Service

If you church is not as active but you want to support the
church in broader mission, consider charities (501(c)3
organizations) affiliated with churches or denominations, that
do excellent work that you want to support.

Food for the Poor
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Catholic Charities
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the The United Methodist Committee on Relief (UMCOR)
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Catholic Relief Services
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American Friends Service Committee
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Mennonite Central Committee
+ Think about pledging or being a monthly
contributor
This helps the organizations make long-term plans and leverages your
support for their most effective efforts.
+
Commit without Earmarks

Think about pledging or being a monthly contributor. This
helps the organizations make long-term plans and leverages
your support for their most effective efforts.

If you trust the organization’s work, give to them without
specifying campaigns, projects or programs. Funding
headquarters undergirds all the work done in the field.
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Sponsor a Child or Family in Need

Philippine Scholars

World Vision

Save the Children
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Compassion

Family-to-Family