When disaster strikes, there are a variety of challenges to rebuild what’s been lost. To make matters worse, individuals and families might not be able to deduct those losses on their tax return. Catastrophic events like tornadoes, floods, and fires can only be deducted as casualty losses when you’re living in a presidentially declared disaster area. That means a lot of people will need assistance in other ways than just a tax break.
Filling the Casualty Loss Gap
Every little bit counts when people are coming together to provide disaster relief. Tax savings aren’t always available to cover damages, but there are still a handful of ways that we can help bridge the gap. Your efforts for legitimate support can help move the recovery process along. Do your research to find a worthy donation process, then follow this advice to make sure you can get your own tax deductions.
1. Crowdfunding Campaigns
Giving money to an unfamiliar crowdfunding campaign should give you pause, but you don’t have to avoid these avenues altogether. You can avoid trouble by starting your own fundraiser and asking friends and your circle of influence for support. Social media can be a great way to spread the word for donations. (Just note that if the cash totals $15,000 or more, you’ll need to report it to the IRS on a gift tax return. If you need help with this, NSO and Company can work with you to sort through the details!)
2. Sending Gifts
After a disaster, you might learn about more specific requests that you can easily provide. Donations don’t have to be in the form of money. Some spare furniture, cookware, toiletries and soap, or other items can help make life more comfortable when families are recovering from a storm. A direct gift won’t be tax-deductible, but it can certainly feel good to know that you’re making a positive difference in someone’s life.
3. Volunteer Work
Your time is also a valuable contribution. If you don’t have extra money or other resources to give, you can pledge support just by showing up to a community event and lending a hand. There might be groups forming for cleanup or home repairs. You can also look into organizing or delivering meals, caring for children, or managing other details for victims. Your unique skill set can go a long way. Partnering with a local charity can help put your talents to good use.
4. Charitable Donations
The local area will probably see many charities and nonprofit organizations hard at work through the recovery process. Making a direct donation to these active teams can help ensure that they have the funds to see their projects through. You can identify trustworthy organizations on websites like CharityWatch and Charity Navigator. Learning more about your options can help you find one that aligns with your own interests.
After you make your donation, keep records of your donations and save receipts. Making charitable donations to a qualified organization will be tax-deductible on an itemized deduction. Talk with your accountant to make sure you’re reporting everything correctly, or give us a call at (317) 588-3131 to review your tax planning process. We’d be happy to help you—as you’re generously helping others!