• Posts
  • RSS
  • ◂◂RSS
  • Contact

  • Donating and Tax Breaks

    August 4th, 2013
    ea, taxes
    People often put down others as donating "for a tax break". Sure they look generous, but they really just want to save money. But that's not how it works.

    In the US you can report money you donated, and for tax purposes that money is treated as if you hadn't earned it. While this does decrease the amount you pay the government, you don't come out ahead financially compared to not donating.

    Let's look at an example. The median family pays taxes at a marginal rate of 15%. That means that if their income were to go up by $1K, federal taxes would go up by $150. If instead of keeping that $1K the family donated it [1] they could "deduct" $1K from their federal income. This would decrease their tax bill by $150, putting it back where it was before.

    (This is particularly strange because people focus on their tax break and not the actual effects of their donation. For example, this CNN article writes that "Thousands of Americans who donated to charities last year in the wake of Superstorm Sandy and the school shooting in Newtown, CT. may not get the tax benefits they were expecting" instead of "Thousands of Americans ... were duped into donating to scams." Of course it's bad that these donors ended up spending $X when they thought they were spending 85% of $X, but that shouldn't be the main story.)


    [1] This is only fully true if the family was already itemizing donations. If you don't have anything else you can deduct then you have to donate more than the "standard deduction", about $6K/person, in order to have any tax benefit from donating at all.

    Comment via: google plus, facebook

    Recent posts on blogs I like:

    Crying in museums

    Exhibits that made me want a better world The post Crying in museums appeared first on Otherwise.

    via Otherwise January 6, 2023

    My Rainbow Kit

    For Christmas I got a really fun kit about rainbows. It had a rainbow catcher, a really cool necklace, a streamer thingy, and it also had a really really cool pinwheel, and it also had a bracelet and a pinata. Unfortunately the pinata didn't work out …

    via Anna Wise's Blog Posts January 5, 2023

    Phones

    I think that once a kid is in third grade they should be able to get a phone. I think that while sometimes parents might want kids not to have them at certain ages, phones can be quite useful at times. Tablets don't have GPS, they don't have WiFi…

    via Lily Wise's Blog Posts January 5, 2023

    more     (via openring)


  • Posts
  • RSS
  • ◂◂RSS
  • Contact