Tax Deductions

The only things certain in life are death and taxes. As the year winds to a close, it’s time to start thinking about how to bring down that tax bill next spring. If you itemize deductions, the money and goods you donate to charity can reduce the amount you owe to Uncle Sam. Here’s how to make sure that you and your favorite causes can maximize the benefits of your end of year donations.

How much good is your charity doing? 

The website CharityNavigator.org rates charities and helps you to see just where your dollars are going. For the final word in tax deductions, the IRS maintains a list of deductible charities and provides any limitations on deductibility. Use their EO Select Check search tool at IRS.gov/Charities-&-Non-Profits to check on your favorite charity.

Thinking about a New Years resolution to get organized?

Donating unused belongings can free up space and save you money. When you make an in-kind donation, be kind to the charity by donating only new or gently used items. As you pare off your formerly prized possessions, work with two containers: one marked donation and one marked trash. You’ll clear twice as much stuff from your home while getting things where they need to go. 

Always get it in writing.

For the Internal Revenue Service to give up its grip on your hard earned dollars, they’re going to want some proof. No matter the size of your donation, ask for a receipt if you want it to count on your tax return. If you donate a large amount of goods, the IRS will expect you to file additional documents with your return to justify the value of your donation. Make a detailed list of what you’re donating, and keep it with your tax records.

One good turn deserves another. If you get into the giving spirit by the year’s end, you just might find yourself on the receiving end next spring!