Tax Deductions Through Charity

What is tithe? Tithe is the process whereby you give one-tenth of your personal income to a church or similar institution.

According to one source, tithing first became popular in the 7th century when everyone was required to pay a tithe to help support the religious, assist in the building of churches, and helping the poor.

While in some parts of the world tithing is mandatory, today it is generally encouraged and as it relates to charities, it is tax deductible.

So the question before you is: Do you tithe? Do you offer a contribution to a church, ministry, or any number of charitable organizations?

While the original mandate of offering 10% of your income is no longer in place, most individuals give as much as 1% of their income today.

If you research tithing online, you will find that several websites offer many reasons why tithing should be dutifully maintained.

On parentalguide.com, their explanation of tithing seems a bit extreme: "Every person is to give 10% of their total income to God. This is called a tithe. Tithing is a command from God. In addition, as the Lord provides, a person should give extra (an offering) and also should give to the poor (alms). Giving an excuse, such as, "I don't have enough," is not acceptable to God. Obey the Gospel."

The more you research tithing, the more you come to realize its many ambiguities. For some, it is the law of the Church; for others, it is unscriptural.

Giving whatever you can to any charitable institution has its rewards. Whether you contribute one dollar or one hundred dollars, tithing affords you the opportunity to help someone in need. While there are a plethora of charitable organizations for which your donation would be much appreciated, tithing is a personal choice.

If you have a loved one who has been diagnosed with breast cancer, you may contribute to the American Cancer Society; if you have a child with cancer you may wish to contribute to St. Jude's Hospital; if you lost a loved one on 9/11, you may contribute to that foundation. Or, if you attend church, you may want to make a contribution there.

The bottom line is not how much you give, but that you give.

Benefits of Calculating and Estimating Your Taxes in Advance

There are many good reasons to calculate or estimate the taxes you will have to pay for the year before you file your return. Below are two of the most common reasons you may want to do so.

Avoiding Too Much Withholding from Your Paycheck

If you are an employee with a steady job and your cash flow is tight, you may not want to have too much withheld from your paycheck. The withholding tables and schedules are set up to protect people from coming up on April 15 with a big tax bill due. So instead, they have an automatic overpayment cushion factored in when your taxes are withheld.

You can avoid this by simply increasing the number of withholding allowances you claim. This is entirely legal and appropriate and helps you avid making an interest free loan to the IRS that you can't collect until you file your taxes next year.

Getting Your Quarterly Installments Right

If you are in business for yourself, you know your business better than anyone else. You know whether cash flow varies or is steady throughout the year, and which seasons are more profitable than others.

Your business budget should give you a reasonable estimate of your profit or loss. From this budget, you can estimate how much tax you will owe. As each quarter goes by, you can recalculate your estimate for the year and determine which method of calculating what you pay for any quarter, e.g. prior year tax due, current year expected earnings, etc., in order to match up with your own cash flow and budget expectations.