As more people participate in “refund season,” the more people are looking for deductions that can be applied to their income tax statements. As we have noted in prior posts, deductions can reduce your taxable income so that less taxes will be required.
Indeed, there are a number of deductions that can apply to your return; and in the next few posts we will be focusing on them. For this post, we will highlight how charitable donations can be applied.
Charitable donations can be made by giving away money or property. When detailing donations on your tax return, it is good to be wary of the following:
Make sure that the charity is a qualified entity – In order for your donation to be tax deductible, it has to be made to an organization that has tax exempt status. Most charities will be obvious in their 501c3 status. This includes charities affiliated with religious organizations and civil service groups. Aside from donating things that you have permission to donate, this is arguably the most important thing to do.
Make sure the items are acceptable – Most organizations take what they can get, but be certain to verify their rules. If you are donating clothes, for example, they may have to be gently used or otherwise in mint condition. Computers must be functional and free of viruses. Cars, however, can have some damage to them.
Keep your receipts– If you choose to itemize your deductions, it is critical that you know the various amounts of your donations. This is especially important if you are donating items worth more than $250.00.