The holiday season is officially here! And with it comes a heavy emphasis on giving and charitable contributions. But festivities and philanthropy aren’t the only things a new year brings. It also brings the beginning of tax season. While donating to charity is a great thing to do on its own merit, it doesn’t hurt knowing that those donations can be tax deductible. With that being said, here are a few ways giving back can give back to you.
Choose Your Donations Carefully
While you may have a preferred organization or charity to donate to, you may not be able to write off those donations as tax deductible. In order to determine your charity’s qualification, you can simply request to see its determination letter. The letter comes directly from the IRS and will clear any doubt as to whether or not your charity is eligible. You can also directly call the IRS.
Always Get a Receipt
This may seem like a no-brainer, but it’s worth repeating. Whenever you make any sort of donation, even cash, you should always request a receipt. The receipt must contain the date, the amount and the organization which received the donation. Almost every single charity or organization will gladly provide a receipt upon request. The last thing you want is to not be able to provide a receipt if the IRS comes knocking on your door.
You Can’t Deduct Time
There are many ways to donate to charity. The most obvious method is through monetary donations, but you can also volunteer your time and efforts into something and have just as positive of an outcome. I’ve even written articles about the importance of volunteering both money and time. Unfortunately, the IRS has a slightly different view on the subject. Simply put, the IRS will not allow you to deduct any volunteer service or time spent. They will only consider monetary donations.
You CAN Deduct Expenses, However
If any of your volunteerism requires some sort of expense that you have to pay out of pocket, you can usually get those deducted. For example, any parking tolls or uniforms costs can certainly be considered tax deductible.
It’s the holidays. This is the time of year when people dig a little bit deeper into their pockets and pull out that extra bit of cash to help someone in need. Not only are you helping countless lives, but you could also be doing yourself a favor come tax time.
Be safe and Happy Holidays!