Money Management

Donating to charity can be a great way to help others, but it won’t always lower your tax bill. Find out the truth about charitable giving write-offs. 

December is a popular time for charitable giving. Not only do the holidays inspire goodwill and cheer, but many people are interested in writing off their donations as we close out the tax year.

There are plenty of wonderful charities that are worthy of your donations. But there’s also a lot of confusion about charitable donations and when you can write them off for tax purposes. Let’s dispel a few common myths about charitable giving write-offs.

Myth No. 1: Any taxpayer can write off a charitable donation

The truth: To write off a donation, you have to itemize deductions on your tax return. For most taxpayers, itemizing doesn’t make sense to do.

You have two choices when you file your tax return:

Claim the standard deduction, which is $13,850 for single filers and $27,500 for married couples filing jointly in 2023. Those amounts will climb to $14,600 and $29,200, respectively, in 2024.Itemize your tax return, which is when you add up the individual tax deductions you qualify for and subtract them from your overall tax liability. This option only makes sense if your total deductions exceed the standard deduction.

To write off a charitable deduction, you’ll need to itemize your tax return. But for most people, the standard deduction produces the most savings, especially since the Tax Cuts and Jobs Act (TCJA) of 2017 substantially increased the standard deduction. Nearly 90% of taxpayers now opt for the standard deduction, according to IRS data. Between 2017 and 2018, when the TCJA rules took effect, the number of taxpayers claiming a charitable deduction dropped from nearly 38 million to less than 15 million.

If tax savings are a factor in your decision to give, be sure to crunch the numbers first. Unless you have other large deductions, like deductible mortgage interest, you might not save at tax time.

Myth No. 2: There’s no limit on charitable deductions for tax purposes

The truth: You can only deduct up to 60% of your gross adjusted income if you itemize on your tax return.

Even if you donated your entire 2023 paycheck to charity, you can’t deduct more than 60% of your adjusted gross income (AGI) on your taxes. If you’re donating to a private charity, like a family foundation, your maximum deduction is 30% of your AGI.

Some people choose to donate appreciated assets, like stocks or real estate, to charity. If you do so, you’re limited to 30% of your AGI based on the asset’s fair market value if you’re donating to a public charity, or 20% of your AGI based on the asset’s fair market value if you’re donating to a public charity. However, you can usually carry forward any excess amount and use it to offset future tax bills for up to five years.

Myth No. 3: Political contributions are tax-deductible

The truth: You can’t deduct contributions to political organizations or candidates.

With the 2024 presidential election approaching, you may be considering a donation to a political campaign or organization. But don’t expect to get a tax deduction for your contribution. The IRS prohibits tax deductions for contributions, including those made to political parties, political organizations, campaigns, and political action committees (PACs). If you’re not sure whether an organization counts as a charity, use the IRS tax exempt organization search tool.

Myth No. 4: You can deduct the cost of tickets if you bought them for charity

The truth: You can only deduct the amount you paid above fair market value for events. Raffle or lottery ticket purchases don’t qualify for a deduction.

If you bought dinner tickets for a charitable event or got a tote bag as a thank-you for your donation to your local PBS affiliate, you can’t deduct your full contribution. In either case, you’ve received something in exchange for your contribution. You’re only allowed to contribute the difference between the contribution price and the fair market value of what you received. In other words, if you paid $100 for an event at a restaurant where dinner would normally cost $25, you could only deduct $75.

You’re also not eligible for a tax deduction if you bought raffle tickets or lottery tickets, even for the benefit of a charity. The IRS says you’re paying fair market value for the chance to win the prize, so you don’t get a tax break on the ticket.

What to do if you’re deducting charitable contributions

Most people won’t lower their taxes by contributing to charity. Helping a cause you care about is the main benefit. But if you are planning to deduct your contributions, here are some rules to keep in mind:

You need a receipt for each cash contribution of $250 or more.If you make non-cash gifts of $500 or more, you’ll need to fill out IRS Form 8283.You’re required to get an independent appraisal for any property gift (not including most stocks, bonds, mutual funds, or exchange-traded funds) of $5,000 or more, or $10,000 if it’s a gift of closely held stock.

Finally, due to the complexity of the rules, consult with a tax professional if you’re considering making a major charitable gift.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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Costco sells more than cheap hot dogs and giant tubs of butter. If you’re still in pursuit of Christmas gifts, check out these five unique Costco items. 

In all my time shopping at Costco, I’ve learned you should never underestimate what the company will sell. You may think you know your warehouse from front to back, from its electronics section to the frozen foods, only to then realize Costco sells the most bizarre items online, like, a 4-person barrel sauna and a 72-pound wheel of Parmesan. A few months ago I even saw Costco selling Babe Ruth autographed cards.

So, while we may always love Costco for its hot dogs and cheap wine, the store has a lot more to offer. If you’re still on the hunt for Christmas gifts, here are five unusual items that could make good presents.

1. A Costco hoodie or board game

Perfect for the Costco lover in your life, this is the warehouse’s official store hoodie. The black and gray versions sport the Costco logo front and center, while the white hoodie has it emblazoned all over. It’s only $26.99 and comes in multiple sizes.

If you like the idea of gifting someone Costco-themed merchandise, you could also check out the Costco Monopoly game for $44.99. Like other themed Monopoly sets, this one replaces the traditional boulevards and properties with Costco locations from around the world. The game pieces are cleverly designed — I like the forearm forklift and shopping cart — and the board is extra big, just like you’d expect from Costco.

>> Not a Costco member? Check out these options on Amazon here.<<

2. Arcade games

You may know Costco sells popular gaming consoles, like Playstation and Nintendo, but did you know it also sells retro arcade machines? Yep, Costco sells both PAC-MAN and NBA Jam as stand-up machines that are attachable to both walls and tables.

Both have 17-inch screens and come with a variety of games. PAC-MAN sells for about $200, while NBA Jam is $150 (after a $50 coupon that expires on Christmas Eve).

>> Not a Costco member? Check out these options on Amazon here.<<

3. Signed sports memorabilia

Costco sells autographed sports merchandise on its website. At any time, you can find signed gear from legendary players, like Mickey Mantle and Shaquille O’Neal, ranging from a variety of sports. Over the last few days, I’ve seen some interesting signatures, like Tom Brady, Joe Montana, Cristiano Ronaldo, and Magic Johnson.

If spending upward of $249,999 on an athlete’s signature doesn’t line up with your personal finance goals, you can also buy sports tickets at good prices on Costco’s website. Costco typically sells tickets in the offseason. For example, in December, Costco is selling baseball ticket packages for the 2024 season. Prices vary based on teams and location, but many are below $100 and come with two tickets. You can also find basketball and hockey tickets, though it appears football tickets are no longer available.

>> Not a Costco member? Check out these options on Amazon here.<<

4. “Around the world” in nuts

If someone in your life loves nuts, you could surprise them with “nuts from around the world.” The nuts are spiced with flavors from five parts of the world, including Africa, the Caribbean, Mexico, and Thailand, and come in three-ounce bags packaged in two tins.

It could make for a special gift, but take note of the price: $59.99 for 15 ounces of nuts. At that cost, you could buy several 45-ounce bags of almonds, or even a three-pound jug of chocolate almonds.

>> Not a Costco member? Check out these options on Amazon here.<<

5. The Costco bear

Finally, let’s end on a Costco favorite: the plush bear that measures almost 8 feet tall (93 inches). It’s not cheap — $400! — but what kid wouldn’t be surprised (or horrified) to wake up on Christmas morning and see a stuffed animal towering over the Christmas tree? And if you have two kids, you could buy them both a bear online and save yourself $100 with Costco Direct.

>> Not a Costco member? Check out these options on Amazon here.<<

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The five Costco items mentioned above only scratch the surface of what you can find online. Costco updates its website frequently, and you might catch something new that no one has seen yet. Take a look for yourself and see what unusual Costco items you can wrap up for your holiday presents.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon and Costco Wholesale. The Motley Fool has a disclosure policy. Read More 

Contrary to popular belief, more money can make life better. Keep reading to learn the findings of a recent study and what they could mean for you. 

We’ve all heard the saying: Money can’t buy happiness. On its face, this old adage is meant to remind us that materialism isn’t the true path to personal fulfillment. And this is true — but having enough money in your checking account to pay your bills, save, invest, and pursue the fun stuff in life certainly boosts a lot of people’s happiness quotient.

Recently, an Empower survey found that different generations reported needing different salaries to feel happy, and the amounts listed might surprise you. Let’s take a closer look at salaries and happiness, and discuss whether it’s worth targeting higher pay to improve your own life and personal finances.

The salary it takes for different generations to feel happy

There was a pretty wide range of salaries needed to make those surveyed by Empower happier, and the data was collected by generation. I wasn’t all that surprised to see the salary figure for my generation. Millennials surveyed reported needing a salary of $525,947 to feel happy, and lest you think that indicates millennials are greedy, I say differently.

My generation is at an economic disadvantage, and some of us are facing raising the next generation as well as caring for our aging parents. We earn 20% less than baby boomers did at our age, despite being better educated, according to research compiled by New America. So it doesn’t shock me to hear that people around my age are seeking more financial security in an increasingly uncertain world.

The income targets reported by other generations were a bit more moderate. Gen Z is hoping for a happiness-generating salary of $128,084, while Gen X’s figure is $130,344. Baby boomers’ salary target was $124,165. The average across all generations was skewed by the higher figure for millennials to $284,167.

Would a higher salary make you happy?

So does this data mean that you, too, should seek out higher pay for the express purpose of being happier? Honestly, I say yes. While no amount of money can fill a hole in your soul (I recommend friends, travel, pets, and hobbies for that), earning more can make it easier to focus your energy on making a fulfilling life.

I’m speaking from experience. After I changed careers to one with higher earning potential in 2021 and worked hard to get out of debt in 2022, my money stress level improved to a huge degree. I no longer have to live without emergency savings, and not worrying about where I’d get the money for a car repair or a dental procedure has been great for my mental health. If you can sleep better at night and not stress about having to take on debt (which would make it harder to plan for a secure future), happiness might indeed be closer at hand for you, too.

How can you go about increasing your pay? There are a few ways to approach it.

Fight for a raise: If it’s been a while since you got a raise at work, it’s time. I recommend putting together some information to show your boss how much you’ve contributed and that you’re an employee worth keeping and paying better.Add to your skills: If you can add new experience to your resume (perhaps there’s a coding class you’ve been considering), you can leverage that into higher pay.Consider a career change: If you’re currently in a field that is beset with low pay (hello, from an ex-museum professional), it might be time for a change of career. It’s worth considering what skills you can transfer to a new role — for example, my museum writing and communications experience and graduate degree made for a smoother transition to becoming a full-time writer and editor.

A higher salary can likely add to your happiness by making your life easier. Going for it is worth it — your happier future self will thank you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Foreclosed homes can sometimes be a great investment, but there are also potential downsides to buying one. Check out a few perks and drawbacks to consider. 

In the third quarter of 2023, 100,546 U.S. properties were in default and had foreclosure filings. Homes go into foreclosure when property owners can’t pay the mortgage loan or have other outstanding claims against their house that result in foreclosure being initiated (such as unpaid property taxes or homeowners association fines).

Sometimes, savvy investors — or even just people interested in buying a house — may want to purchase a foreclosed home. But before moving forward with this type of transaction, it’s very important to consider the pros and cons.

3 benefits of buying a foreclosure

Here are a few advantages of purchasing a foreclosed home.

You may get a great deal. It’s very common for foreclosed properties to sell at a price below market value. That’s because not everyone wants to deal with the hassle and risk of buying a foreclosure.You can often take ownership of the property quickly. You won’t have to go through the traditional purchasing process, which can take weeks or even months as you wait for a seller to be ready to move out and your mortgage lender to originate your loan.You may get instant equity. If you can pay below what the home is worth, or if you can buy a foreclosure that needs some fixing up and you can do the work cheaply to increase its market value, you may end up with a lot of equity in the house very quickly.

For most people, the biggest benefit of buying a foreclosed home is the possibility of getting a great deal. Paying a lower price for a property can enable you to get into a home you might otherwise be unable to afford or can allow you to make an investment in real estate that earns you a generous profit.

3 big downsides of buying a foreclosure

While there are some huge benefits to buying a foreclosed home, there are big potential downsides to be aware of as well. Here are some of the biggest cons of buying a foreclosure.

You’ll probably have to pay cash or get alternative financing. If you are buying from a foreclosure auction, you will generally not be able to get traditional financing. You may need to pay cash or use alternative — and expensive — sources of financing, such as hard money loans.You often can’t tell the condition of the property. You usually aren’t allowed to go into a home in foreclosure to inspect the property before buying it. This could mean you end up buying a home that has a lot of problems — especially because people who are being foreclosed on can sometimes damage a property on purpose or may not have been taking care of it due to money issues.Unpaid debts could come with the home. A foreclosure doesn’t necessarily wipe out all claims on the property. If creditors have a lien against the home or an ownership claim in it, this could become your responsibility since the lien follows the property. You can usually do a title search to find out about most claims, but this is not necessarily a guarantee other debts won’t pop up. Getting title insurance is a good idea in this situation.

You need to carefully consider these potential disadvantages and make sure you know what you are getting into if you’re thinking of buying a foreclosed home. If you’re prepared to finance your purchase, have researched outstanding claims on a property, and are ready to get to work making fixes if necessary, then buying a foreclosure may be a good option. But if you aren’t ready to take on these potential issues, then purchasing a home through the more traditional process is a better bet.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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All the biggest airlines have frequent flyer programs. Check out exactly how to get frequent flyer status with the major U.S. carriers. 

For decades, airlines have operated frequent flyer programs to reward loyal customers. There are normally multiple tiers in these programs. Each status tier includes perks, such as complimentary upgrades when available.

Airlines used to base your status on how many miles you’d flown, but it has gotten more complicated. Many of them now base frequent flyer status on spending, or on a combination of spending and mileage. This often includes spending on airfare, as well as on any airline credit cards you have.

If you’re deciding which program to focus on for frequent flyer status, you’ll find the requirements and notable benefits for the four largest U.S. airlines below.

American Airlines AAdvantage®

American Airlines bases your AAdvantage® status entirely on Loyalty Points. Each eligible AAdvantage® mile you earn is equal to one Loyalty point. Since American Airlines credit cards earn miles, they also earn Loyalty Points that can help you raise your AAdvantage® status. This makes American Airlines one of the easier airlines for frequent flyer status — if you spend enough on your credit cards.

Delta Air Lines SkyMiles®

Delta Air Lines recently made changes to its SkyMiles® program. Starting on Jan. 1, 2024, members earn Medallion status through Medallion Qualification Dollars (MQDs). You can earn MQDs by flying with Delta and its partners, booking Delta vacation packages, and using some of the more expensive Delta credit cards.

Southwest Airlines Rapid Rewards

Southwest Rapid Rewards has fewer tiers than most programs. There are two: A-List and A-List Preferred. You can reach them either through taking enough flights or earning tier-qualifying points. The fastest way to earn points is with one of the Southwest credit cards.

In addition to frequent flyer status, the Rapid Rewards program also offers a Companion Pass. This is one of the most valuable perks that Southwest offers, so it has even higher requirements than A-List Preferred status.

United Airlines MileagePlus®

The United MileagePlus® program uses two qualifying activities:

Premier qualifying flights (PQFs): Based on the number of flight segments flown.Premier qualifying points (PQPs): Based on airfare cost. Some United credit cards can also earn PQPs, up to annual PQP limits that depend on the card.

There are two ways to reach frequent flyer status with United. You can either meet a PQF and PQP requirement, or meet a higher PQP-only requirement.

Should you try to get frequent flyer status?

It makes sense to go for frequent flyer status if you travel with the same airline several times per year. In that case, check out the travel credit cards that the airline offers to see if they can help you elevate your status more quickly.

The benefits you get as a frequent flyer can help your finances and make traveling with that airline more enjoyable. Complimentary upgrades, in particular, are a fantastic benefit. The higher your status is with an airline, the more likely you are to qualify for an upgrade.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Lyle Daly has positions in Delta Air Lines. The Motley Fool recommends Delta Air Lines, Flow, and Southwest Airlines. The Motley Fool has a disclosure policy.

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