In difficult economic times like these, it’s natural to search for ways to cut expenses and reduce the pressure on your family income. Among the many ways to lower expenses, the easiest may seem to stop making donations to your favorite charities. If we truly believe in what these organizations are doing, discontinuing our financial support means that we stopped believing that they are important. What happens to our personal values when we reject one of the primary principles by which we live our lives?
When times are difficult for us, they are even more difficult for those in need. The organizations designated to assist them must accommodate for increased demands and decreased revenue during economic stress. Charities across the country have reported a drop in donations of as much as 30 percent, even as the number of people dependent upon their assistance rose steeply.
Government expenditures maybe have helped some industry sectors, but who is helping individuals in personal distress? How do those individuals cope in regions where these industries aren’t located? The key source of assistance continues to be people like you, giving from their hearts.
Tax benefits soften the impact of charitable donations on the family budget. The first $200 of a contribution to registered charity qualifies for a federal tax credit of 15 percent of the amount donated; amounts beyond the $200 level earn a 29 percent tax credit. Provincial tax credits may also apply; the amount varies from province to province.
In order to take advantage of the larger tax credit for $200+ donations, married or common-law couples may pool their donations and claim them on a single return. Another hint: If your income varies widely from year to year, you can carry your charitable donations forward as much as five years when, thanks to a higher taxable income, you could receive a larger tax benefit.
You may also assist a charity and earn tax credits by donating real estate or a life insurance policy. A life insurance policy will generate a tax benefit based on its cash surrender value. You could consider transferring an existing life insurance policy (or open a new policy) with the chosen qualified charity as the owner and beneficiary. Each premium payment qualifies as a charitable donation and is eligible for a tax receipt.
See the faces behind the numbers
Though practical aspects of charitable donations are not to be ignored, it is the human factors that inspire our offerings. Those in need of food, shelter and emotional support continue to depend upon assistance from you and your neighbors.
Our communities may be in need of repaired roads, extended parklands, and various bricks-and-mortar aspects of our lives. We should never forget, however, that our spiritual lives are equally important. The assistance we provide to others less fortunate than ourselves helps define who we are and the values we treasure.
For help in getting your financial needs in balance so you can live a more generous life, contact FaithLife Financial. We can provide a detailed financial analysis, giving you the peace of mind that you have the necessary insurance coverage and investment mix for your current situation.
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