Everyday charitable donations for your taxes

Thursday, March 22nd, 2012 By

A mosaic lithograph depicting a Bible-era example of charity toward the poor.

Charity: good for them and good for your taxes. (Photo Credit: Public Domain/Providence Lithograph Company/Wikipedia)

Giving gifts to charity is a great way to assist those in need and give yourself a nice break in the form of tax deductions. There are many everyday ways to make your charitable donations count, from goods to cash. Here are a few ideas you can use for next year’s tax return.

Sponsor yourself or a friend in a charity event

Each year, there are countless runs, walks and rides that benefit charities. By sponsoring a participant, whether it is yourself, a friend or a complete stranger, you can show support for a worthy cause and give yourself another tax deduction. This can be done in person, over the telephone, through the mail or online. Even via text message. Check your records for a receipt or similar confirmation of your donation to charity, because you’ll need it when you file your taxes.

Charitable donations website Philanthrophy.com notes that charities raised $1.69 billion through events of this nature alone during 2011.

[Raise your sagging budget with installment loans]

Deducting drive time to volunteer ops

Taxpayers who spending time driving to volunteer sites such as a homeless shelter, food bank, Habitat for Humanity construction site or similar location may be able to use the vehicular mileage as a tax deduction. The exception to this, CPA Don Anderson recently told Bankrate, is when the volunteer receives any reimbursement at all for this travel.

In order to remain eligible to deduct this charitable donation-related expense, you must keep record of all mileage accumulated. Then you will be able to deduct 14 cents per mile. Check the tax code at the time, as this figure can fluctuate. It may not be much – business mileage merits a 55.5 cent tax deduction per mile – but it’s better than nothing at all. CPO Howard Rosen notes that other traveling expenses incurred en route to a volunteer site, such as a hotel, may also be eligible for a tax deduction.

Making meals for homeless people

Whether it is organized through a house of worship, community center, school or non-profit, the cost of preparing meals for the charity of the needy or homeless is commonly tax deductible. Preparing items for immediate consumption, for a bake sale, cook-off or any number of charity-related food events can typically be deducted.

As with any other type of charitable contribution, track your costs with receipts that quantify ingredients used. Only out-of-pocket expenses count, which means that the value of your labor cannot be quantified and deducted. It is also very important to note that in order to claim it on your taxes, food for the homeless much be distributed through an organization, rather than served directly to homeless individuals with no middleman in sight.

The gift of purchased items

Schools and social service agencies will collect personal items for charitable donation. Children need school supplies and toys, disaster victims need blankets and indigent seniors may need adult undergarments. All of these are examples of items to charity that can serve as tax deductions. Keep the receipts and you’re on your way to a larger tax refund.

The gift of used items

If you don’t have the money to buy new, unopened items for charity, giving used items to organizations like Goodwill or community yard sales is also viable. Not only will you be helping a cause with your charitable donation, you’ll be positioning yourself for additional tax deductions and de-cluttering your home or office.

To determine how much the charitable donation of a used item is worth, CPA Gail Rosen told Bankrate that the taxpayer should find the “lower of cost or fair market value and provide more details if your deduction is over $500.”

The ethical implications of charitable giving

Sources

About.com

IRS.gov

WiseBread

Previous Article

« Why you should carry a loan account

There are some situations, rare as they may be, where you have the opportunity to pay off a big purchase in cash. Even if you can pay an item off in cash, though, it may be a better idea to take out a loan. The structure of debt A credit score is [...] Paid in Cash
Next Article

Talking with kids about drugs easier than talking about money »

A new survey released by T. Rowe Price has revealed that most parents have a very tough time talking with their children about money. The survey is only of 1,008 parents and 837 kids, but the answers are revealing. Parents insecure about children’s finances For parents, talking to kids about money and [...] Kids and Money