How Nannies Can Get a Tax Write-Off by Donating to Charities

On the first day of the new year we discussed how to spend you holiday bonus which led into this week’s discussion on how nannies should develop a financial plan.

If you're already debt-free, have fully funded your investment accounts, and have your emergency funds are in order, you've got it made. There are plenty of deserving, but under-funded, charitable causes that could use some support.

Only donate money that you are sure you can spare. You will want to claim your donation as a tax deduction you must get a receipt.

Get a Tax Write-Off:
Remember, not all charitable donations are tax-deductible. This is because "tax-exempt" does not mean "tax-deductible." If you want to make sure you can deduct your donation, look for an organization that has 501(c)(3) status. If you aren't sure about the 501(c)(3) status of your charity of choice, then ask, they will be more than happy to tell you.

According to the Internal Revenue Service (IRS), you can deduct donations to:
* Religious organizations
* Federal, state, or local governments
* Non-profit schools and hospitals
* Public parks and recreation facilities
* War veterans groups

You can't deduct donations to:
* Individuals
* Labor unions
* Social or sports clubs
* Foreign organizations (except certain Canadian and Mexican charities)
* Homeowner's associations
* Political candidates

1. Start with the Internal Revenue Service (IRS): The IRS provides a list of all of the organizations that have received tax-exempt status (see above). Click here to search the IRS for charities.

2. Visit the Federal Trade Commission web site: Click here to visit the Federal Trade Commission lists tips for donors.

3. Visit the Better Business Bureau (BBB) web site: The BBB has a portion of its site devoted to donating money. It provides a database of approved organizations, as well as general advice and information for donors. Click here to visit their charity section to get reports on specific charities, ask about a charity, lodge a complaint against a charity, and get more tips on charitable giving.

4. How much goes to the cause? Also consider how much of your donation actually goes to the cause. While some foundations give 100% of the donation to those in need, others retain a percentage to cover operating costs. Charities will be up front about this (they have to, according to the IRS) so make sure to do your research so that you end up with an arrangement that makes you comfortable.

If you don't have the money to donate, you can always donate your time to volunteer for charities, which can be added to your resume. We will discuss this at another time.

Have you ever had a tax deduction from donating to a charity? What charities have you donated to?