Save money on your taxes with charity deductions.
If you file taxes, chances are that you hope to save money on them in any economic climate. Understanding charity deductions can help you lessen your tax burden. Although you may be eager to donate, be sure that the charity you support is legitimate. Deal with organizations that have been in business a while to avoid getting scammed.
Goods
If you donate clothes and household items to a charity, you can typically write them off on your taxes. According to the Internal Revenue Service article "Ten Tips for Deducting Charitable Contributions," the items you donate must be in good or excellent condition for you to write them off. Examples of donations you may have made include donations to Red Cross for flood victims. Keep a written record if you donate old equipment to Salvation Army and Goodwill, too. You must have a written acknowledgement from the organization if the value of your donation was more than $250.
Money
You can deduct financial contributions if you donate to a charity organization through cash, checks, payroll deductions and credit card payments. According to the H&R Block article "Tax Deductions," you need a receipt or bank record of all monetary donations you make to charities. For instance, you cannot claim a cash donation that has no receipt or bank record because the IRS needs written proof of the transaction.
Property
You can deduct property that you donate to a charitable organization. Examples of property you may donate include property, stocks and land. Specific rules apply about how much you can deduct, although you can typically deduct the fair market value. For instance, the H&R Block article "Tax Deductions" claims that you must know whether the property would warrant short- or long-term gain from its sale. The difference is that you may be able to claim the smaller of the fair market value or the full fair market value.
Driving Costs
If you are donating your time to a charitable organization, you can typically claim the cost of driving, parking and toll fees. According to the Bank Rate article "A Tax Tip on Claiming Those Hidden Charity Deductions," you can claim 14 cents per mile that you drove on the way to and from the volunteer area. You could donate 32 cents per mile for volunteer efforts for Hurricane Katrina, although that deal was only offered during 2006. Travel expenses are also deductible if you drive while you are doing volunteer work. For instance, if you collect food from your neighborhood for hungry families, you can deduct driving costs.
Student Lodging
Student lodging is another area that lets you claim charity deductions on your taxes. Although you can not claim your child or daughter-in-law, you can claim boarders not related to you who are full time students. They must be in high school or younger; they cannot be college students. Also, you must have an agreement with a qualified organization that provides educational experiences for children.
What You Can't Deduct
You can not deduct the time you spend volunteering. For instance, if you design a website for a charity, you can not deduct the fee you would typically charge for your services.
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