- Days left

Make Your Charitable Giving Go Further at Tax Time

×
charitable giving and taxesIf you gave money to charity last year, you're in good company. Charities received more than $290 billion in gifts in 2010, and once the economy starts to get stronger, you can expect those figures to increase.

But as April 15 approaches, you'll want to know how your charitable giving can score you a bigger tax refund. Here's what you need to know.

Can You Deduct Donations?

The biggest obstacle for many charitable givers is that you can only deduct your gifts if you itemize your deductions. An estimated two-thirds of taxpayers take the standard deduction rather than itemizing, and for them, charitable giving doesn't result in a bigger refund.

If you do itemize, though, you'll want to make sure you collect all the information you need to claim your deduction on Schedule A. If you only make monetary gifts, the requirements are pretty simple: Keep a copy of your canceled check along with the acknowledgment letter the charity should send you.

Accounting for Non-Cash Donations

Other types of donations are more complicated. For instance, many people give away clothes, and several charitable organizations solicit gifts of used cars.
  • With clothes and similar items, the key to taking a deduction is making a fair estimate of what your gift is worth. You cannot deduct the full amount you originally paid -- only the current value of the gift is deductible. The better the records you keep, the easier it is to make your case if the IRS audits you.
  • For vehicles, the requirements have gotten more complicated. Most charities don't actually use donated vehicles or pass them on to the needy directly -- they sell them at auction for cash. In those cases, your deduction is limited to what the charity receives when it sells the vehicle -- even if its Blue Book value is higher.
  • Another vehicle-related item that many people forget about is mileage. If you drive your car for charitable purposes, you can deduct $0.14 per mile.
What If You Get a Thank-You Gift?

If a charity gives you something back for your donation, it can cut the tax-deductible value of your deduction. Except in the case of low-cost items like mugs, you have to reduce your deduction by the value of what you received.

Don't let these requirements stop you from getting the deduction you deserve. What you save could help you make an even bigger charitable gift this year.

More on saving on taxes:




Motley Fool contributor Dan Caplinger is happy to have the IRS subsidize his charitable giving. You can follow him on Twitter here.


Increase your money and finance knowledge from home

What is Inflation?

Why do prices go up?

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

TurboTax Articles

Video: Who Qualifies for an Affordable Care Act Exemption (Obamacare)?

The Affordable Care Act requires all Americans to have health insurance or pay a tax penalty. But, who qualifies for an Affordable Care Act exemption? Find out more about who qualifies for an exemption from the Affordable Care Act tax penalty, how to claim an exemption on your tax return and how the Affordable Care Act may affect your taxes with this video from TurboTax.

Video: How to Claim the Affordable Care Act Premium Tax Credit (Obamacare)

The Affordable Care Act Premium Tax Credit is a new refundable tax credit that can lower your monthly health insurance premiums. If you qualify for the tax credit, you can claim the Premium Tax Credit throughout the year to lower your monthly health insurance premiums, or claim the credit with your tax return to either lower your overall tax bill or increase your tax refund.

Deducting Summer Camps and Daycare with the Child and Dependent Care Credit

If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of up to up to 35 percent of qualifying expenses of $3,000 for one child or dependent, or up to $6,000 for two or more children or dependents.

What Is Schedule H: Household Employment Taxes

If you hire people to do work around your house on a regular basis, they might be considered household employees. Being an employer comes with some responsibilities for paying and reporting employment taxes, which includes filing a Schedule H with your federal tax return. But even if you have household employees, filing Schedule H is required only if the total wages you pay them is more than certain threshold amounts specified by federal tax law.

Add a Comment

*0 / 3000 Character Maximum