Today is National American Red Cross Founder’s Day which marks the anniversary of the American Red Cross, which was founded in 1881 by Clara Barton, the first president of the organization.
In celebration of National American Red Cross Founder’s Day we wanted give you tips on tracking your charitable donations, which you can use year round so you can reap the benefits of a valuable tax deduction at tax time.
Of all the deductions you can claim on your tax return, charitable donations are ones you can forget during the year, but are easy to track if you use these strategies.
Use a Designated Donations Receipt Folder
We live in an increasingly technology-driven world but you can also use a physical file folder to hold all of your receipts, a single place where you can go to find out what you donated, to whom, and when. If it’s a cash or property donation, you only need to keep the receipt.
In addition to a physical file folder, you can keep digital copies as well in a dedicated folder. Each year I create a tax year folder with a donations sub-folder for this purpose. Every receipt is scanned or downloaded and put into that folder.
Keep a Donation Index File
In that same donations receipt folder, I keep a simple file that lists all the donations.
If you like spreadsheets, use Excel or Google Sheets. If you like text files, Notepad will do just fine.
The goal is to have a single file with every donation, so you can see them all at once without having to open each individual file. Typically, you want to include the name of the charity, the amount of the donation, the date the contribution was made, and what type of donation it was (cash, check, credit/debit card or goods). Even though this information may be recorded “somewhere” in your checkbook or credit card statements, the spreadsheet will avoid the need to sift through dozens of pages of bank statements at year-end.
Rely on Year-end Statements from Charities
If you are making large or regular contributions to well-established charities, such as houses of worship or nationally recognized charities, you will usually get a year-end tax statement. This will confirm the amount of your contributions throughout the year, as well as the dates that they were made.
You’ll want to maintain your own but these are good backups to have.
Create a Charitable Giving Account
If you make a large number of donations each year, one of the simplest ways to track the activity is to open a charitable giving account. Your contribution will be a single tax free contribution each year and you can recommend how those funds are disbursed to charities.
If all of your donations are made through that one account, all activity will be recorded in a single place and ready for tax preparation.
Donations Tracking Using TurboTax ItsDeductible
The best and easiest option is TurboTax ItsDeductible app that enables you to track and value donations throughout the year. This covers not only the donations themselves, but also charitable mileage, as well as the donation of investment securities. It provides values of donated items and also gives you the ability to get answers to donation questions on the go. And at year-end, all of the information can be imported into TurboTax for effortless tax preparation.
When using these strategies you can feel good about tracking and valuing your donations while giving throughout the year.