- 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

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

Economics 101

Intro to economics. But fun.

View Course »

TurboTax Articles

What is Schedule F: Profit or Loss from Farming

If you earn a living as a self-employed farmer, you may need to include a Schedule F attachment with your tax return to report your profit or loss for the year. The Internal Revenue Service defines ?farmer? in a very broad sense?whether you grow crops, raise livestock, breed fish or operate a ranch.

5 Tax Tips for Single Parents

Filing taxes as a single parent requires coordination between you and your ex-spouse or partner. Usually the custodial parent claims the child as a dependent, but there are exceptions. A single parent is allowed to claim applicable deductions and exemptions for each qualifying child. Even though you claim your child as a dependent, she may still have to file her own tax return if she has income, such as from an after-school job.

Add a Comment

*0 / 3000 Character Maximum