Americans are some of the most generous people in the world. We not only donate our money, but we donate our time to help those in need here in the US and throughout the world. Giving happens all over our great country every day; Charity Navigator reported that "without charities and non-profits, America would simply not be able to operate." American Red Cross is celebrating 135 years today and Thursday, May 26, is the second annual Red Nose day. Giving is a win-win and even a win-win-win situation: you help others, feel good doing it, and if you know the rules, you can even reap some tax benefits. Here are a couple of things to keep in mind when it comes to tax-deductible charitable donations that will help you keep more of your money.
First, only contributions made to qualified non-profit organizations can be deducted. To verify the status of the organization you can easily search qualified charities on the IRS Website. A charitable organization has gone through many requirements to be qualified as such to receive tax deductible donations. Make sure you know exactly who you are giving to; failure to do so could bite you later.
Next, keep receipts and records of your donations. Cash donations, to be deductible, require a cancelled check or a receipt from the charity with their name and donation amount - regardless of the amount. One way to track the change you tend to donate throughout the year is to drop the change in a bucket at home. Then write a check to the charity for the amount of change you have in the bucket annually, or more often if you like. This allows you to continue to give your spare change, but still have a record of your contributions.
Also, when it comes to charity events or purchases from a charity, deducting the appropriate amount can be tricky. IRS rules only allow a deduction for the amount of the donation over any benefit you receive; they do not allow a deduction for the cost or fair-market-value (FMV) of the item or ticket you purchase. For example, paying $100 for a gift basket valued at $75 will only entitle you to take a $25 deduction. However, if you purchase the tickets or item and donate back to the organization or another qualified organization you can deduct the full cost. The same concept holds true when donating the items from your spring cleaning. This area is especially easy to overlook, so pay special attention this year as you clean out your home. Another commonly missed area is when kids leave college for the summer and you donate many of your items rather than pay to ship it all back home. The donation amount is based on the FMV of items like clothing, appliances, toys, and furniture, which must be in good condition. You can use eBay or Craigslist or check consignment shops to determine the FMV of most items. I recommend writing the amount on the back of your donation receipt so when tax time comes around you won't have to scramble to figure out the value of your donations.
Finally, if you are one of the millions of volunteers in this country, you may be missing a deduction. The tax law doesn't allow you to claim the value of your time or expertise when you volunteer but it does allow you to claim mileage and all unreimbursed expenses. So keep track of all the miles you drive each year for your volunteer commitments and keep those receipts when you buy items you are not reimbursed for during your volunteer work.
Giving doesn't make you a good person and not giving doesn't make you a bad person, but if you are giving then the smart tax move is to keep track of your giving and be ready to take advantage of the tax deduction. Join the Win - Win -Win club. The charity wins as they need resources and you are providing those resources. You win twice: first, you get to support an organization that you believe in and second you get to keep more of your dollars from taxes by taking a deserved tax deduction - thereby keeping more of your money!
How to vote
Vote-by-mail ballot request deadline: Varies by state
For the Nov 3 election: States are making it easier for citizens to vote absentee by mail this year due to the coronavirus. Each state has its own rules for mail-in absentee voting. Visit your state election office website to find out if you can vote by mail.Get more information
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General Election: Nov 3, 2020
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