Are you getting the tax break you deserve?
Taxpayers often overlook and underreport their charitable contributions on their tax return. And while there are no hard statistics, the Treasury Department is not looking out for you to ensure you are reporting all your deductible charitable giving. So what can you do to maximize your deduction?
- Research the Charity: Make sure the charity you donate to is a qualified charitable organization. The IRS has lists available if you want to check, but the charitable organization should also confirm that your gift is tax deductible.
- DO NOT donate cash: Recent rule changes require you to document all your cash contributions. So resist the urge to drop coins in a bucket or collection basket, a check is much better.
- Be careful about donating your vehicle: Make sure the organization you donate your vehicle to either uses the vehicle, or is in the business of using your vehicle to train others. If you donate your vehicle to a group that simply re-sells it, your donation is limited to what they receive for it AND NOT the usually much higher fair market value.
- Keep track of your non-cash donations: Keeping track of non-cash donations is one of the most overlooked deductions. Keep a slip of paper that documents each donation, include the quality of the item, and take a photo of the goods. Only items in good or better condition can be donated.
- Keep receipts and acknowledgements: There are many different tax rules here, but the bottom line is if you have a receipt and donation acknowledgement from the charitable organization you have the basics for defending your deduction. Other documentation is often required, but without the receipt and proper gift acknowledgement you are out of luck.
- Don’t forget your miles: You are eligible to deduct your auto mileage at 14 cents per mile while driving for a charitable activity. Driving for meals on wheels, or to volunteer at a cancer fund raiser, and other charitable driving miles are often not tracked by taxpayers.
- Consider donating appreciated stock: If done correctly you can use the higher value as a donation deduction without paying taxes on the appreciated value of the stock.