Year-End Charitable Giving for Verizon Employees

As the holiday season approaches and the end of the year draws near, the Verizon pauses to express gratitude for our bounties and the people in our lives. It is also a time when charitable donations are frequently contemplated. As part of your year-end tax planning, you should consider the tax benefits associated with charitable giving, which could increase your ability to give.

According to a recent survey conducted by Fidelity Charitable, more than half of retirees and pre-retirees (age 55 and older) said they plan to increase their charitable giving in the next few years. This may be due in part to the tax benefits associated with charitable giving, which can help offset the tax burden of required minimum distributions (RMDs) from retirement accounts.

Tax deduction for charitable gifts
Generally, if you itemize deductions on your federal income tax return, you can deduct charitable contributions. This may also assist increase the size of your donation.

Example(s): Assume you wish to make a $1,000 charitable donation. One method to potentially increase the value of the gift is to add the amount of any income taxes saved through the charitable deduction. You might be able to give $1,316 to charity at a 24% tax rate [$1,000 (1 - 24%) = $1,316; $1,316 x 24% = $316 in tax savings]. Alternatively, at a tax rate of 32%, you may be able to donate $1,471 to charity [$1,000 (1 - 32%) = $1,471; $1,471 x 32% = $471 in taxes saved].

Certain percentages of your adjusted gross income (AGI) from personalization_token('contact.employed_by__c', 'your company') may limit the amount that can be deducted. For instance, your deduction for cash gifts to public charities is generally limited to 60% of your AGI for the year, whereas other gifts to charity are typically limited to 30% or 20% of your AGI. Generally, charitable deductions in excess of the AGI limitations may be carried forward and deducted over the subsequent five years, subject to the income percentage limitations applicable to those years.

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For 2021, the normal standards for charitable contributions have been enhanced: the limit for direct cash gifts to public charities has been increased to 100 percent of AGI. Even if you do not itemize deductions, you can still receive a deduction of $300 ($600 for joint returns) for direct cash donations to public charities (in addition to the standard deduction).

Ensure you keep proper documentation of your charitable donation. In order to claim a charitable deduction for any contribution of cash, a check, or other monetary gift, those in Verizon must maintain a bank record (such as a cancelled check, a bank or credit union statement, or a credit-card statement) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you claim a deduction for a charitable contribution of $250 or more, you must provide a contemporaneous written acknowledgment of the contribution from the charity. There are additional requirements if you make non-cash contributions.

Year-end tax planning
When making charitable donations at the end of the year, Verizon must remember to include them in their year-end tax planning. Typically, you have some influence over the timetable of your income and expenses. In general, you should time the recognition of your income so that it is taxed at the lowest possible rate, and you should time the recognition of your deductible expenses so that they can be claimed in years when you are in a higher tax bracket.

For instance, if you are an employee of Verizon and expect to be in a higher tax bracket the following year, it may make sense to delay making the charitable contribution until January so that you can claim the deduction the following year, when it will result in a greater tax benefit. You may also move the charitable contribution and other itemized deductions to a year in which your itemized deductions exceed the standard deduction. If the aforementioned income percentage limits are a concern in one year, you may want to consider shifting income into that year or shifting deductions out of that year so that a larger charitable deduction is available for that year. A tax expert can assist you in evaluating your individual tax situation.

A word of caution
Verizon employees must deal only with reputable charities and be wary of those with similar-sounding names. It is common for fraudsters to pose as charities using phony websites, emails, phone calls, social media, and in-person solicitations. Using the Tax-Exempt Organization Search tool on the IRS's website, irs.gov, research the charity. Don't send cash; use a check or credit card instead.