How to Help Local Charities (And Save Money)

Residents of Nyack, Piermont and Rockland as a whole are no strangers to charity.

Several non-profits in the area are thriving and helping those in need. For example: the American Red Cross—which has an office in Nyack—recently helped residents displaced in a house fire.

The Red Cross is just one of many—there's also United Way of Rockland, the Homeland Children's Foundation and People to People, which helps families and individuals in Rockland County find short-term assistance with food, clothing and guidance through food pantries, recycling programs and more.

The success of these charities is a testament to residents' generosity—even when the economy is bad, they give.

But philanthropy can help save you some money, too—tax laws reward residents for making donations. Donations by cash, check or credit card to charities or government bodies are deductible within set limits as long as certain conditions are met.

The impact of this deduction? Uncle Sam becomes your partner in making contributions. For example, if you are in the 33 percent tax bracket, the government is effectively making almost one-third of your contribution through the tax savings you enjoy from the deduction. Generally, you can write-off annually up to 50 percent of your adjusted gross income (AGI) to charity if you itemize your deductions. There is no dollar limit on your annual deduction—you are merely limited by your AGI.

And donations that exceed 50 percent of your AGI can be carried forward for up to five years. For example: if your AGI is $30,000, you can deduct only $15,000 in cash donations. But if you actually donated $20,000, you can deduct $15,000 this year and carry the $5,000 excess amount forward to the next year.

Now, certain conditions must be met to claim a deduction for your cash contributions to a charity. First, donations must be made to a qualified charity (just because a charity calls itself one does not mean it is tax-qualified). To be official, the charity must receive IRS approval to be a tax-exempt organization. The charity must be a domestic non-profit organization, trust, fund or foundation that is operated exclusively for certain purposes such as fostering amateur sports competition, prevention of cruelty to children or animals, religious, scientific, literacy and educational purposes.

Other organizations also include domestic fraternal organizations, non-profit veterans' organizations, federal, state, city or town governments (and even Indian tribal government).

(Being thorough is always a good idea: questions about an organizations status can be checked at the IRS online database.)

And remember: you must keep proof of your donation in the event your return is questioned. If you make a donation of $250 or more, you must obtain an acknowledgement from the organization to which you made the donation. If you make smaller gifts to one charity throughout the year, they are not totaled for purposes of the $250 limit; each gift stands alone. Get the written statement for a donation of $250 or more by the time you file your return. Your canceled check or credit card statement is not sufficient substantiation of your deduction.

(However, a pay stub or Form W-2 showing withholdings from pay for a charitable contribution is treated as a valid receipt, too—you would not need a separate acknowledgement.)

So: before the next time you give, learn how you can benefit, too.