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Charitable Giving and Your Taxes

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With so many people facing difficult times due to the high cost of living and recent natural disasters, there are many ways to help those in need. Whether you already gave to charity or you are considering giving, you may be wondering what charitable donations are tax deductible.

What is a Tax-Deductible Charitable Contribution?

If you volunteer and give cash or non-cash items to a 501(c)(3) organization, your donation may be a tax-deductible charitable contribution. Before you donate, be sure to confirm that the organization you’re donating to is a registered 501(c)(3) organization. You can check to see if the organization you are going to make a donation to is a 501(c)(3) organization at the IRS website. You must give to a registered non-profit organization (not an individual) that operates as a true charity in order to take a tax deduction for the donation.

Who Can Deduct a Charitable Donation?

If you donate cash and non-cash items to a 501(c)(3) organization and you itemize your deductions, then you can deduct the fair market value of your donations. Be aware, you will only be able to take a deduction for your charitable donations if you itemize your deductions. If your itemized deductions are close to the standard deduction ($14,600 single and $29,200 married filing jointly), donating may increase your itemized deductions enough to be over the standard deduction. This allows you to deduct more and save money on your taxes.

Donating Cash vs. Donating Stuff

When you write a check, charge a donation, or simply provide cash to a charity, the amount of your potential deduction is simply the amount you contributed. Sometimes you might donate household items, such as old clothing or furniture. In that case, things are not so straightforward. Instead of being able to deduct what you paid for the items donated, you are limited to the amount that the items are worth.

A reasonable estimate, usually based on what you could get for your items at a thrift shop, is sufficient. No matter whether you donate cash or goods, be sure to get a receipt. If you donate something worth more than $250, a receipt is required. If you donate goods worth more than $500, you have to attach Form 8283 to your tax return. If your deduction is more than $5,000 per item (or for a group of similar items), you must obtain a qualified appraisal as well. 

Don’t worry about figuring out the accurate value of your donations. TurboTax ItsDeductible will help you accurately value and track your donations year-round, and then you can automatically import your donations into your tax return at tax time.

Did the Charity Give You Anything?

If you receive something in exchange for your donation, like a nice meal or a gift card, you can only deduct your contribution to the extent it exceeds the value of what you received. So, if you make a $150 donation to a charity that provides you with a meal valued at $50, your tax deduction is $100.

Fortunately, most charitable organizations provide you with a summary of the tax-deductible amount of your contribution when they send you a letter thanking you for your generosity.

Timing Your Donations

Whether you donate cash, non-cash goods, or charge the donation on a credit card, you can deduct your contribution in the year you make the donation. Some methods used to donate are pretty cut and dry with regard to when the donation is considered deductible, but there may be a few methods used, like via check, text message, or charge card, where you may be wondering, “When is my donation considered made and tax deductible?”

  • Donations via check: The donation is considered delivered the date you mailed the check.  
  • Contributions via text message: Deductible in the year you send the text message if the contribution is charged to your telephone or wireless account.
  • Credit card: Contributions charged on your bank credit card are deductible in the year you make the charge.

Don’t forget you can even make a donation on the last day of the year and receive tax savings while helping someone in need. A donation made in late December means tax savings on a return due less than four months later. A donation made the following January can’t be claimed until the following year.  

While potential tax savings shouldn’t impact your charitable giving, it makes sense to be mindful of the opportunities provided by appropriate charitable tax planning. After all, the more you save when you donate, the more you can afford to donate again. Now is the perfect time to show your generosity and give to your favorite charity.

TurboTax Has You Covered

Don’t worry about knowing these tax rules. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed. 

2 responses to “Charitable Giving and Your Taxes”

    • Hi Paul,

      If your granddaughter qualifies as your dependent on your tax return under the IRS dependency rules you may be able to claim the daycare expenses. Click here to have a look at an article we recently published regarding the dependency qualifications.

      Don’t be too concerned with knowing all the rules. TurboTax asks you simple questions to give you all the tax deductions and credits you’re eligible for based on your responses to questions.

      I hope this helps.
      Thank You,
      Katharina Reekmans

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