When you make a decision to donate to charities, you can also positively impact your federal and state tax refunds.
Here’s What You Need to Know:
Whether or Not You’ll Itemize Your Tax Deductions
When you file your taxes, you choose whether or not you want to itemize deductions. Itemizing means instead of taking a standard per person or per married couple amount that you deduct from your taxes, you will have enough allowed deductions, such as from mortgage interest, which you will want to add up your deductions and take those instead. You can only deduct charity tax deductions if you are itemizing. If you’re unsure which way is best for you, try itemizing and not itemizing when filing with tax software. Submit the form where you pay the lowest amount.
When it comes to charity donations, the most important thing you can do tax wise is to ask for and save your receipts. You can’t declare your donations otherwise. You more than likely will not be able to get a replacement or donating small items like clothing. But, if you did donate something like a vehicle, the charity will have kept good records, and will give you a new copy.
Donations Add Up
There is a standard amount that you can donate for most clothing, appliances, etc. Especially, when you have small children who outgrow clothing quickly, a few dollars in tax deductions per item adds up quickly. You can also claim donations you made to your church or place of worship. Charity events can get tricky. You can claim the amount above what the event was actually worth. So, if the tickets were $100 each and a comparable night out would have cost $50, you can claim $50. Auctions work the same for your place of worship or another charity.
Find Convenient Places to Donate Items
There are clothing drop-off bins all over New York City where I could drop off clothing for donation. I’ve dropped off clothing in these bins, but I don’t receive the tax deduction that I would if I had brought it to a place that could give me a receipt. If I dropped off the clothing at a thrift store that happens to be attached to a nonprofit, I could donate my clothes there and get the rewards on my tax returns.
When in Doubt, Call the IRS AND Check the Website
When my dad passed away, my mother’s accountant tried to tell her she couldn’t declare the donation from donating my dad’s van that had a lift for electronic wheelchairs. We didn’t want to sell the van because we knew that the difference between having and not having a van with a lift can mean a huge difference in quality of life. Since we didn’t sell it, not being able to deduct the $10,000 for my dad’s van could have been a huge detriment to mom’s finances. (I’m not an accountant, but I looked up the rules on the IRS website). I could have called 800-829-1040, too. Anytime you’re in doubt on a tax issue, you should look them up.
Tax deductions for charity donations are a wonderful thing. If you’re itemizing, check your state’s tax form for deductions for donations, too.