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Donations and tax savings: you need to know that


The Advent season is the classic time for donations: to whom you can give money with a clear conscience and how the tax office can help you to achieve an even greater effect with your donation – an overview.

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Photo: Axel Heimken / dpa

Did you have the luck of the fit in 2022?

Was your job a good fit, did you get a higher salary and perhaps an additional tax-free inflation bonus because your company is doing well despite the crisis?

And do you also have the energy costs under control?

If you're part of this group, you might want to give a portion away at the end of the year.

Either to those whose work is particularly close to your heart.

Or to those who have not had it so good in life in 2022 or in general.

In other words, you want to donate.

Personally, I've been following a very simple strategy for years.

I donate to associations and foundations whose successful work I have been able to convince myself of - ideally personally.

For others it may be the White Ring, the local refugee aid or the football club with its particularly good youth work.

For me as a journalist, it's the Wikimedia Foundation or - I'm very close - the Panther Foundation of the taz and Greenpeace.

Who is best to donate to

This is about how you can best donate to the association or project that is particularly close to your heart.

There are two suitable strategies for searching for a suitable recipient.

One possibility: you look for organizations that do good in your area and that could do a lot more good things if they had more money.

They get the association's most recent annual report (which is often available online) and use it to check how donated money is being used and whether it enables the association or foundation to do better work.

It's even nicer if you can talk to the people involved.

Perhaps you know the club's youth coach, the social worker who organizes the table or the cashier at the chess club.

If you don't have such access, but you have the urgent feeling of wanting to give away some of your financial success, you can of course also do this with the big fundraisers as another option.

There are, for example, aid organizations such as Misereor, Adveniat or Bread for the World or environmental organizations such as Nabu, Greenpeace, BUND or WWF.

The democratic parties also need money for our social decision-making process.

And it's important that it's us who fund their work and that this money doesn't come from some secret source.

You can usually read about what the clubs and institutions actually do with the collected money in the annual reports, even for large organisations.

Take advantage of tax benefits when donating

Good deeds are rewarded – this also applies to donations.

Because whenever you donate to a charitable organization, you can deduct the donated amount from your taxes as a special expense.

This means that depending on the amount and tax rate, you will be reimbursed part of your donation via the tax return from the tax office.

For donations over 300 euros, a donation receipt is required, for anything less than this, a bank statement, for example, is sufficient.

The deduction as a special edition is a bit unfair.

Because if you earn more, you get more reimbursement, even if you donate the same amount.

With donations to parties, the situation is different up to certain limits: if you donate 800 euros, for example, you pay 400 euros less in taxes, i.e. half the donation, regardless of how much he or she earns.

De facto, the deduction as special expenses means that we are all giving financial support together as tax-paying donors.

The so-called tax code regulates which goals the state finds so worthy of support that associations or foundations organized accordingly can make use of this tax privilege.

Getting a part of the donation money reimbursed by the state is legitimate and great.

Maybe you can or even want to donate a little more from the start.

trust and control

Despite the tax advantage: When it comes to money, I belong to the faction "trust is good, control is better".

I would like to know whether the donation money is being used properly.

If I know the institution I'm donating to well, I might be able to form my own opinion.

In many cases, however, this is not possible.

Then, thank God, there are donation seals like the one from the DZI.

The German Central Institute for Social Issues (DZI) checks what happens to the donations, how much of the donations the clubs and foundations use for their own organization and how much money goes directly to the purpose of the donation.

This is often not so easy to separate.

If, for example, the purpose of the association is to provide information about environmental issues, then of course every information leaflet is important.

But how important is the money spent on fundraising campaigns?

The DZI takes care of these questions, and the seal promises: work is done efficiently here.

A real help if you are not sure whether the association or foundation is doing its work sparingly.

Is it a bad sign if a club doesn't have such a seal?

Not necessarily.

Because the DZI seal has to be worked out fairly hard.

And of course, many smaller clubs are wondering whether the resources that are required for this should not be better used directly for the purpose of the club.

As a conservative person in this respect, I have a dual strategy.

Either I know the association or the foundation well enough to trust myself to make a clear judgement.

Or I expect a DZI seal.

I don't donate without one or the other.

donations without money

One last note: Do you have no money left, but do you have time and want to do something good and meaningful with it?

Then donate the time to the association or foundation you trust.

Get involved.

If you also want to save taxes by doing this, talk to the association and see if they can promise you a fee that you can then immediately donate again.

This is called an expense donation in tax law.

This construction is not only legal, but also expressly desired.

You can accompany the youth team of your sports club and arrange reimbursement of childcare costs or, for example, fuel money with the club, which you then donate afterwards.

It is only important that you have previously agreed in writing that your work will be remunerated in principle.

And now, based on my own experience, I would like to urge the passionate tax savers among you to hurry up a bit.

If you want to claim your donation for the year 2022 from the tax office, the payment must also have reached the association or foundation in 2022.

For larger sums, you even need an explicit donation receipt.

If you only send your donations after Christmas, it has already happened to me that the donation did not reach the association until the new year and therefore only counted for the tax return for 2023.

You then have to wait much longer for relief from the state.

I wish you a merry and peaceful Christmas.

Do something smart with your money!

Source: spiegel

All business articles on 2022-12-17

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