Money Rehab with Nicole Lapin - Charity Comes Back to You on Tax Day. Here's How.

Episode Date: April 19, 2022

Donating to charity is awesome for three reasons: 1) It helps people. Duh. 2) Helping people has been shown to make you, yourself, happier. 3) It gives you more tax benefits. Nicole explains. See omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. The Cole Lappin. There's tremendous grace in volunteering your most valuable asset, time, even if you don't have money to give.

But when you do have money, that grace gets some gusto with the impact you're able to have. As Margaret Thatcher famously said, no one would have remembered the Good Samaritan if he'd only had good intentions. He had money as well. Okay, Marge, fair enough. Fair enough. Donating to charity is awesome for three reasons. Number one, it helps people, duh. Number two, helping people has been shown to make you yourself happier.

And number three, it gives you more tax benefits. If we double click on the third, that is for your taxes, here are the six things you should keep in mind. Number one, donate to a qualifying charity or organization. Yes, you can't give money to just any organization and call it a charitable donation. The organization must be tax exempt as defined by 501c3 of the IRS code. Typically, an organization will say somewhere on their website if they're tax exempt, but you can always reach out to the organization and just ask. Number two.

Before you donate, ask how much of your contribution will be deductible. It's not a given that your entire contribution will actually be deductible. And if you're making a certain contribution with the assumption that you'll be able to write the whole thing off, you're going to want to check first. Number three, document your contributions. I know this might feel like an obvious one, but you'd be surprised how many stories I've heard of someone doing all of the work to make a tax-advantaged donation and then not being able to write it off because they can't find the record of the donation?

Anywhere. Don't let this be you. Save the receipt from the organization and the bank statement or credit card statement where your payment is reflected. If it came directly out of your pay, save the corresponding pay stubs. Number four. If the donation is for more than $250, get a letter of acknowledgement from the organization stating the amount and whether or not you got something in exchange for it. Hopefully not, that is kind of the whole point. Number five. If you donate more than $500 in non-cash or

in-kind items like clothes, food, even your car, you have to fill out an 8283 form. If it's more than $5,000, you should get an appraisal so that the IRS can see the donation was indeed legit. You can find the 8283 form on the IRS website. It's irs.gov. I'll put that link in the show notes. Number six, don't forget that volunteering counts. Not for your time, but for all of the expenses around the time you spent volunteering, like gas or public transportation. I'm sure I don't need to convince you that giving is an important part of living, but in case you need some more woo-woo, I truly believe in the law of attraction when it comes to money.

The more you put out in the world, the more that comes back to you. We all know stingy people who have a lot of money and really generous people who don't have a lot of money. Being generous has more to do with your state of mind than the state of your bank account. Rich and generous is what we're striving for. For today's tip, you can take straight to the bank. Before you donate, do some research on the organization's overhead. And a quick dictionary note here, overhead is basically just a fancy term for expenses. You want to understand how your donation is being used,

right? Once you dig into the research, does the charity seem to have so much overhead that not a lot of the people's donations are actually going to the cause? If so, then find another cause you care about or another organization working toward that cause. There are plenty of deserving ones out there who will make your money count. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work,

Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.