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Charitable Donation Tax Benefits and Tips

With only one week left of December and the 2020 tax year, we’re highlighting some Charitable Donation Tax Benefits and Tips for individuals.  We get a lot of questions asking about what the benefits are of charitable donations, so we’ve worked together with Alexandra Dawes, Founder of Virtual CFO Solutions, to bring you this quick list of everything you need to know about how your charitable donations can affect your taxes.

If you’ve donated to a registered charity this year, hang on to your receipts because they could help save you some money on your taxes! Donations not only make you feel great about making a difference in your community, but also come with several tax benefits you can take advantage of. Check out a quick list of all the tax benefits of charitable giving below:

Charitable Tax Benefits and Tips for Individuals

Why should I claim my donation on my taxes? 

You can save money on your taxes! If you owe money on your tax return this year, you can reduce the amount owed by claiming your charitable donations. “The tax savings will come as a non-refundable tax credit (meaning it reduces any income tax owing).”

What if I don’t owe money this year?

If you are already receiving a tax return, save your donation claims for another year. Your charitable donation tax credit cannot be used to create or increase a tax return amount.

How much can I claim each year?

“You can claim charitable donations of up to 75% of your total net income for the year.”

How much can I receive in tax credits for my charitable donations?

The federal tax credit rate for up to $200 is 15%, and above the first $200 is 29%. There is also an additional rate within each province (BC is 5% up to $200, and 20% above $200).” If your total for donations is less than $200 you may want to consider either claiming those donations on another tax year, or transferring your donations to your spouse or common law partner. 

Is it beneficial to transfer my donation to my partner? 

Yes! “Donations can be claimed by either you or your spouse/common law partner.” Remember, “your first $200 of donations are claimed at a lower rate, so it’s beneficial to mix donations with your spouse if they exceed the $200 threshold.” 

For example, if you have made a $200 donation and your spouse/partner has made a $100 donation, you will receive more tax credits by claiming the whole $300 under one person. If you claim them separately you will receive $30 and $15 each for a grand total of $45. If you combine the two donations under one person, you will receive $59 total (the first $200 at 15% and the additional $100 at a 29% rate). These rates do not include the additional provincial rate. 

Can I still claim my donation from previous years?

Absolutely! “You can carry forward any unused donations up to 5 years.” As long as you have a tax receipt, you can save your donation claims for a year you are owing income taxes. If you want to make the most of your donations tax credits, you can also accumulate them and wait to claim them all in one year. This way, if you’ve made many small donations, it might help you achieve the 29% rate for additional donations after your first $200 claimed. 

Do I need to keep my receipts?

It’s important to keep your official tax receipt in case CRA requests it!”

These tips are a general guideline for the benefits of a charitable donation, and Virtual CFO Solutions recommends that it is always best to get professional tax advice for each situation. 

Ready to make your end-of-the-year donation? Check out our Cause Pages to easily donate to charities that support the causes you care most about.

Make a donation to:

Support Arts & Culture 

Support Children & Youth 

Support Education & Literacy 

Support Environmental 

Support Health & Wellness 

Support Human Rights 

Support Sustainable Housing & Food Security 

Support Women’s Causes 

Don’t know which cause to choose? Check out our Cause Quiz to help you make your giving decision.

Want to give back to your community?

Get in touch. HeartPress is the go-to resource for businesses to help during the COVID-19 outbreak. Our non-profit partners are counting on the support of local businesses and individuals more than ever. Contact us to find out how you can help.

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