Tips for Maximizing Your Charitable Donation Tax CreditsBrian Jang ON November 8, 2016
Canadians are a giving lot, opening our wallets and our hearts whenever we can. And why not? Donating to charity is not only a great way to get more involved in the community, but also helps us feel terrific. And if that wasn’t incentive enough, your donation can also generate a nifty tax break. Planning to donate to a great cause? There’s no time like the present to get started. Here are some steps to help you get the best tax deductions for donations.
Not All Charitable Donations Are Tax Deductible
Any organization or cause that you feel is worth giving to is money well spent. But a word to the wise, not all charities are created equal. Only registered charities qualify for income tax credit. The Canada Revenue Agency (CRA) Donations and Gifts will help point you in the right direction.
What Is a Tax Receipt For?
Ultimately, whatever registered charities you decide to go with, hang on to all your receipts. Make sure each receipt has a registration and serial number and is signed and dated by the organization.
Charitable Donations Made Easy
Giving more to charity doesn’t need to be a hassle. The easier it is, the more likely you are to continue donating throughout the year. A quick and easy way to give to a charity is through payroll deduction. It is a breeze to set up and will also help keep you committed to the causes you choose. Plus, it will help you stay on top of how much you donated and when. Just let the payroll department know who you want to donate to and how much.
Qualify For the Highest Tax Rate
In case you didn’t already know, if your total donations exceed $200.00, you’ll qualify for the highest tax rate. The precise amount varies from province to province, but you could potentially save up to 45%. Haven’t quite reached that magic $200.00 mark? No problem. You can pool your donation with your spouse.
Can Donations Be Carried Forward?
If combining your charitable donations with your spouse is not an option, you can still take advantage of the over $200 rule by carrying them forward. According to the CRA, you are allowed hang on to your receipts for up to five years before you claim them. Keep in mind, however, donation credits are nonrefundable. So when you do finally decide to claim them, make sure it is on a year where you owe taxes. Otherwise, you’ll miss out on the tax credit.