The holiday season brings out the Santa Claus in all of us. According to Charitynavigator.org, in a typical year, 50 percent of all charitable gifts are made between the day after Thanksgiving and the end of the year.
But just because your clients are feeling generous at this time of year, that’s no reason for them to act foolish. There are simple rules to follow that can maximize the benefit not only to the client’s intended beneficiary but to the client’s financial well-being as well.
Here are a few tips that can help your clients get the most out of their desire to do good:
1. Do your homework on the recipient. Make sure the chosen charity gets a lot of bang for the buck. Any charitable institution worth its salt will be happy to open its books to someone who wants to make a sizable donation. Help the client find out exactly what their donation will pay for.
2. Make sure the client can itemize. Clients who are in a position to claim only the standard deduction should be warned that they won’t get as much benefit from a charitable donation. If that’s the case, a careful perusal of their tax situation might help them figure out how much they would need to donate to make itemizing deductions a more profitable alternative. Watch out for also for the Alternative Minimum Tax; if the client has been subject to AMT in the past, they may not be able to itemize on their 2013 return either.