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It’s Always a Good Time to Think About Giving!

It’s Always a Good Time to Think About Giving!

December has come and gone. Decisions are upon us. All of the normal holiday decisions, like which new gadget to buy the little one or which relatives to invite (or not invite) for Christmas dinner, have danced through our heads.

Now in the new year with things back to normal post-coronavirus and election mania, we remain busy helping clients adjust for a more favorable tax return in 2023. One way to have a more favorable tax return is to take advantage of the increased charitable-giving deduction through some IRS-approved charitable giving. Each month provides us an opportunity to identify some causes to give to. After a few years of hard hits on the economy, along with the impact of climate change, there are plenty of people and places needing help. Here are some tax-break giving ideas to get you started.

Color Of Change: Best charity that supports the Black community

Color Of Change is a civil rights advocacy nonprofit that works to build a better world for Black people. This nonprofit has 7 million members, making it the biggest online racial justice organization in the U.S.

The Innocence Project: Best legal aid charity

More than 365 innocent individuals have been exonerated, thanks to DNA evidence. The Innocence Project fights for justice by re-examining cold cases with new DNA evidence and freeing those who were wrongfully convicted.

Center for Reproductive Rights: Best women’s health charity

This nonprofit envisions a world where every woman is treated as an equal and is free to make crucial decisions related to her own reproductive health.

Operation USA: Best disaster relief charity

From ongoing earthquake recovery in Ecuador and Nepal to programs for Native Americans in South Dakota, Operation USA delivers aid to all corners of the globe. The nonprofit has worked in over 101 countries since 1979.

Here's a quick overview of four expanded tax benefits impacting the 2022 tax year for both individuals and businesses:

1. Increased charitable-giving deduction: For your 2022 tax return, provided you itemize expenses, you can deduct up to 100% of your adjusted gross income (AGI – total income minus other deductions) by way of qualified charitable donations. If you take the standard deduction, you can claim up to $300 ($600 for married filing joint) for charitable contributions made in cash.

2. Increased standard deduction: For the 2022 tax year, the standard deduction amounts allowed have increased in line with inflation. A single filer can claim $12,950; married filing jointly can claim $25,900; married filing separate can claim $12,950; while someone filing as head of household can claim $19,400.

3. Business deductions: As in any tax year there are a ton of deductions one can claim for business purposes, including travel and home office expenses. However, if you are one of the millions of people who work remotely you will not be able to claim the home office expense deduction, as this is reserved for the self-employed only.

Structuring one’s affairs via a business vehicle, including an LLC, is a prudent way to mitigate annual tax exposure. However, the appropriate structure must be in place and effected prior to Dec. 31 of each year. To determine if this strategy can benefit you, call our office for a consultation at 470.207.8717.

4. Child Tax Credits: The IRS mailed out increased checks for the Child Tax Credit payments ($3,600 per child, up from $2,000 per child in 2021) in 2022. These checks represent an advance of allowable credits for the 2022 tax year. This means your tax refund will be reduced by the amounts received earlier in the year. However, if your income significantly rose this tax year, you may owe the IRS, as the early payments were based on your 2021 income.

At Alexander Fitzgerald & Associates, LLC, we’re always game to help you think things through to suit your specific tax situation. Please contact us at 470.207.8717 for a consultation.

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