Why are New Jersey residents so giving this time of year?
When you donate goods to the local food bank this holiday season, or write a nice-sized check for the church down the street, are you doing it for them or for yourself?
According to an assistant professor of public policy at Rutgers-Camden, the tax benefit of charitable donations may be a factor in some New Jersey residents' giving moods during the final month of 2016. Donations made before the end of December count towards 2016 tax returns that must be filed by Tuesday, April 18.
"I would imagine that a lot of people probably wait until the end of the year (to give) because they really want to see how much total income they've made to maximize their deduction," Michael Hayes told New Jersey 101.5.
Additional savings at tax time, though, are only possible for those who opt against the standard deduction and itemize their expenses such as charitable giving, medical bills, mortgage interest payments and New Jersey's notoriously-high property taxes.
In a recent survey from GuideStar, an advocate for nonprofit transparency, more than half of surveyed nonprofit organizations said they receive most of their contributions between October and December.
That's not to say, however, that this spike in giving is fueled primarily by the prospect of a larger tax return, Hayes noted. Individuals tend to be more charitable now compared to other parts of the year simply because it's the holiday season. Also, nonprofits focus a lot of time and marketing on garnering donations this time of year.
Plenty of households who make donations do not receive a tax benefit because of the size of their donation compared to their adjusted gross income.
"The satisfaction of giving to others is likely the primary driver for why individuals donate, while the tax deduction serves as a nice bonus," Hayes said.
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