- May 28, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Curiosity Sparked: Seeking to Understand Charity and Tax Benefits
So, I’m really intrigued and eager to comprehend how this whole concept works, specifically in terms of the interaction between charity and taxes.
I’ve often come across scenes in movies where wealthy individuals donate to charity as a means to offset their tax liabilities or for other financial reasons. However, the specifics of how this process functions have always eluded me. I’m curious about the intricacies involved in this practice.
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By using the AI Legalese Decoder, individuals like myself can gain a clearer understanding of the legal implications and benefits associated with charitable donations and tax planning. This can ultimately demystify the process and empower individuals to make informed decisions regarding their philanthropic endeavors and financial obligations.
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****** just grabbed a
I give $100 to charity. At the end of the year I claim back 33.3%.
I am down $66.66.
People who think this is a loophole or there is some way to benefit other than giving money to charity, fundamental misunderstanding how it works.
In NZ you get a 33% tax credit for donations.
https://www.ird.govt.nz/income-tax/income-tax-for-individuals/individual-tax-credits/tax-credits-for-donations
In movies it would depend on the tax regs in that hypothetical jurisdiction.
It’s not that easy to start a charity either.
I know someone doing work with mental health and theh can’t register it as a charity.
You can only claim the 33% to the extent of the tax you’ve paid for the year. So if I’ve earned $70k and paid $14020 in income tax, but I made $60k of donations, I’d only receive $14020 in rebate.
This thread is a fucking disaster.
The best bit was the 200k painting for 900k bit.
If you were going to donate anyway, it’s a nice perk to get 33% back. It actually motivates me to donate in the first place, so it’s a win for the charity I support too.
A lot of Tik Tok accountants on here.
The world would be a much better place if basic tax knowledge was taught in school.
So much incorrect information and opinions here. Try this: [Tax credits for donations (ird.govt.nz)](https://www.ird.govt.nz/donations)
Yes. I give to my church and get 1/3 back on my income tax with the year end receipt.
When you are really really rich you own so many companies including the charity too so technically you are moving the money from one pocket to the other while claiming the tax write off. That’s how really rich people do it.
E.g
– I made income(133) and paid tax of 33.33, so got paid $100 after tax
– I claim the tax back so have $33.33, the charity has $100
– the charity pays and gives our gifts (to me and my friends) or allows me to use its assets for free like a nice boat. Maybe the charity needs a nice office too that I can use. – I decide to use the boat!! 🛥️ and get $100 of now untaxed value plus my $33.33 still in my pocket.
I guess if you owned the charity maybe you could game it a bit but that’s just gonna be fraud
The only rort ima ware of with respect to charities is when people have built up businesses and then said “I’m putting the ownership of this business into a charitable trust so all profits go to charity”. What they neglect to mention is they sell the business to the charitable trust with a massive debt back so the charitable trust is paying out debt and interest annually and doesn’t actually make any kind of bottom line after tax profit to be able to donate.
Makes the front page news look good whilst hiding the back door dealings.
I do D2D for a charity here in NZ and one of the points I stress when I give my pitch is the tax deduction, Especially if the person says “that’s a little too much for my budget” then I can sell them on the tax rebate part.
In reality it’s just an incentive for someone to donate, you don’t make anything on it, you just get some money back for being a nice person.
You can basically get 33% of the total amount you donated (subject to your taxable income). You can also regift your rebate… so say you gave $1000 donation, you could regift your $333… which means you can then also get a rebate of $111 which you can regift… long story short… your $1000 donation could increase by a third just by regifting your rebate.
There is also payroll giving, so you can get your donation taken out from your wages, and the rebate will automatically be rebated.. i.e. if I set up a regular fortnightly donation to a charity via payroll giving of $10… only $6.66 deduction will show up on your bank statement, but $10 will be transferred to the charity.
I think in the USA you can donate at the end of the tax year and it removes that amount from the tax you owe. I’m not entirely sure though since their system confuses me, but that might be what movies are referring to
Somebody should lock this thread it’s full of misinformation and nonsense.
There are ways to utilize the donation tax rule to pay less tax. The 2 that I know of are:
I donates to a charity (that I own/operate). Because that is a donation, I can write some of it off. Charities don’t pay tax. If that donation happens to purchase a car so I can borrow, happy day.
I don’t donate money, but a painting to an auction. I bought that painting for $300k two years ago. My appraiser told me that painting now worth $3M. I paid the appraiser 5% the price of painting ($150k) as agreed. Now donate that painting and claim $1M tax credit. Happy day.
Oversimplify, but that is the gist of it.
A good trick is for businesses to collect donations from their customers. That amount is then “paid” by the business so they can claim 33% back.
A big thing you can do is donate art instead of cash.
Buy a painting for 200k
Donate it with an agreed value of 900k
Suddenly thats an additional 600k youve magicked up and can write off as deductions to a value of 300k