As our final T-slips arrived last week, I’ve started pulling together the massive pile of paper that I’ll need to calculate our taxes. The stack of dental and eye doctor receipts are generally useless but the stack of charitable receipts is worth a good ka-ching. That’s what gives me the incentive to make sure that I’ve found them all.
The Danger of E-Receipts for Charitable Donations
I can understand charities trying to cut costs by not mailing out paper receipts. If the banks can tell me that it costs them $2 to send a bill, then a charity that has to send out receipts could waste thousands of dollars a year.
The danger is that most charities send e-receipts or send a link to a website with an e-receipt, almost as soon as you make a donation. Even if the donation was made January 1. That means you have to remember to find them all when tax time comes the following spring.
Try to make it easier on yourself. Set up a folder called either Taxes or Charities on your email account. Move the notes to that folder as soon as you receive them.
Similarly, for paper charitable receipts, try to keep a folder or a binder with a “page protector” folder in it. File the receipt as soon as it arrives so you can find it when you want it.
What *Me* Give? I Don’t Donate. Or Do I?
You may think you don’t donate much. If you’re like many of us, though, you probably give $20 here or there without even thinking about it, especially if you work in a large office or other place where co-workers are canvassing for their causes.
Here are some of the receipts we had to remember to find:
- Run for the Cure (Sept/Oct)
- Daffodil Days (April)
- Red Cross Appeals
- Heart and Stroke Skip-a-Thons
- Ride for Heart (May/June)
- Camps (May-August)
- In Memorium Donations (for friends and relatives who died and requested donations to charities)
- Movember (October/November)
- Social Outreach Charities
- United Way (especially if your workplace coerces you into giving even if you wouldn’t otherwise)
- Nursing and Palliative Care
- War Amps (March-May)
I’m sure I’ve missed a few. We’re always being hit up for donations to support our children’s, nieces’ and nephews’, siblings’, extended families’ and friends’ charities of choice. Hopefully, though, this list will get you thinking, and maybe checking your email archives.
What If I Miss a Receipt from a Charity?
Fortunately, the CRA let’s you claim charity receipts from any donations made during the current tax year and the previous 5 years. So on your 2013 return, for example, you can claim charitable contribution receipts from 2008, 2009, 2010, 2011, 2012, and 2013.
Why Might I Give My Charitable Donation Receipts to My Spouse or Partner?
Unlike many circumstances where the CRA seems determined to treat married and legally-common-law couples as if they are single, for charitable giving they are willing to admit you’re in a partnership. They are willing to treat a donation made by either spouse or partner as a joint donation. Consequently, one person can claim all of the charitable contributions made by both parties.
The benefit is because there is a different tax credit for the first $200 you contribute and for each dollar given above $200.
If both spouses or partners claim their charitable receipts separately, the $200 hurdle has to be jumped twice. If the receipts are combined, up to an additional $200 benefits from the maximum tax credit.
Here’s an example:
Imagine Sarmud and his wife Noor both donated $200 each in 2013.
They live in Newfoundland.
If they claim their receipts separately, each one will get a tax credit (combined federal and provincial) of $45.40.
If one of them claims the full $400, the tax credit is $130.
That’s $39.20 more tax credit.
Why Might I Choose to Wait to Claim my Charitable Contributions?
Around here there is no benefit in waiting. We donate well over the $200 hurdle each year. However, for some people there may be an advantage in waiting a year or two to claim their charitable givings.
Jumping the $200 Hurdle
The impact of charitable donations on your taxes varies. The first $200 donated gets you less back than all amounts above $200.
Because of this 2-tiered system, it may be worth gathering your receipts for 2 or more years before claiming them to maximize how many dollars are claimed above the $200 level.
For example, using the CRA calculator:
For a person living in B.C., if you claim a $200 donation, your total tax credit is $40.12.
If the donation was $400, the total tax credit is $127.52.
That means waiting until you have $400 gets you $47.28 more in tax credit
So what are you waiting for? Go out there. Give money. Then claim it in the best way to get the best tax credit.
Will you be eligible for the First-Time Donor’s Super Credit? Do you resent the fact that only new givers are getting a reward? Please share your insights with a charitable comment.