This week, I received a question no one has ever asked before. It was a question about charitable giving. My client sent me an email and said,
"Thanks for talking with us yesterday. I meant to ask for your comments on charitable giving. I'll try to put you on even more of a spot: how much would you expect me to be providing in charitable donations each year? (No fair peeking at previous tax returns!)"
"This is an interesting question. I think it is a very personal decision. I would really have no expectation of this number.
- I have some clients who based on their religion tithe 20% of their income each and every year.
- I have others who give minimally even though they are high earners.
- Many go year-by-year. If they feel they have extra, they give more.
If giving is important than I think it needs to be factored in as a budget item and planned for.† That's as exact as I can get on this one! It's just varies too much from person to person!"
To which he responded, "Well played!"
Charitable giving really is a personal decision.† If you are going to give though, there is no reason you shouldn't look at doing it in a tax-efficient way.
Here's an overview of what types of charitable contributions are deducible and how much of a deduction you get.