Whether you attend volunteer events, bring your old clothing to Goodwill or are able to make a monetary donation to the Animal Humane Society, most of us are trying to make a positive impact in our communities.
The best part of charitable donations is that not only do you give to those who need it most, but you can also receive financial assistance in the form of tax write-offs if you do your homework. With that in mind, here are a few simple steps to figuring out how to benefit from charity on your taxes.
How much do you need to donate?
In order for your charitable giving to be worth your while when it comes to tax season, the value of your donations should add up to more than the standard deduction of $12,400 for tax year 2019.
For example, if you are filing as a single person and your itemized deductions add up to approximately $9,000, you will end up paying taxes on the $3,400 more in income than you actually needed to if you claimed them instead of the standard deduction.
Another thing to keep in mind is that your donations can be in smaller amounts or types across many different charities as long as you have proof of the donation and they add up to an amount of money that is beneficial to you financially when filing your taxes.
What counts as a donation?
When giving to a charity, the biggest aspect of their organization that you need to know about is whether or not they are tax-exempt. You are only allowed to deduct contributions made to a qualified recipient.
Community organizations, religious organizations and veteran organizations often qualify as tax-exempt, but if you are not sure you can always use the IRS’s Tax Exempt Organization Search to verify their status.
The two main ways that people give to their favorite charities is through either cash or property donations. A donation of goods can include clothing or household items to a Salvation Army or by donating that car you no longer use to your local public TV or radio station.
Unfortunately, you cannot claim time spent volunteering on your taxes. However, if you do a lot of volunteering throughout the year, you can claim the mileage on your vehicle getting to and from the volunteer activity as long as you have receipts for those trips.
What do you need to claim charitable donations?
It should come as no surprise to you that the IRS does not simply take a person’s word for it when it comes to taxes. With that in mind, you really only need a couple of things when preparing your taxes for submission.
Make sure to put together an itemized list of every qualifying charitable donation you have made over the last year. With that list, double-check that you have receipts, bank statements or letters of acknowledgment from charities you donated to that all prove the claims you plan to make.
What tax forms will I need?
Itemized deduction may be more complicated than your basic tax program can handle, so involving a tax professional may be in your best interest financially. However, if you want to do it yourself, you will want to make sure you have Schedule A of IRS Form 1040.
Tax season is often a time of stress and anxiety, but it does not have to be. If you have given a lot to charities this year and are looking to receive a little something in return other than good feelings, follow these steps and you will be in a great place.
Let us know if you have questions about charitable donating in the comments.