Save Big On Taxes With Charity-Related Donations
When doing your taxes, one of the deductions most overlooked are charitable contributions. You can deduct a maximum of up to 50% of your adjusted gross income (AGI) on Line 36 on IRS Form 1040 for the tax year in which the donation was given. If you find yourself with more than 50% in one given year, the excess may be carried over for up to five years.
If you don’t think you give large amounts to charity, think again. Throughout the year, all those little donations can add up to huge savings on your tax bill. Set up a small box and start dropping in all your charity-related deduction slips in the box. You’ll be surprised at how quickly they’ll add up.
Remember that time you came out of the grocery store and stopped at the “Girl Scout Cookies” table outside? You bought over $20 in cookies and opted to have them sent overseas to our soldiers. Or maybe you donated boxes of cookies to a shelter or food pantry? Inside the grocery store, for the holidays, you also bought a couple of meals for the needy. The meals and cookies can be deducted. You can also deduct the ingredients you bought (flour, sugar, milk, vanilla) when you had to bake all those cupcakes for a school fundraiser. Drop those grocery-store receipts in the box.
If you volunteer for a charity and have to pay a babysitter while you volunteer, jot down the date, time, charity and how much you paid the sitter and drop it in the box. The same goes when you have out-of-pocket expenses. If you use your car to volunteer for a charitable organization like Meals on Wheels, or maybe you drive a youth group each week, deduct 14 cents per mile. Keep a little log in your car and note event, date and miles.
What about spring-cleaning? Each year you go through clothes and household items. Every year you donated all the coats and clothes your kids outgrew. You can deduct a fair market value for the coats/clothes (entire value if they’re new). Don’t forget the times you dropped off old books, toiletries or clothing to your local shelter.
Consider calling the Salvation Army or Goodwill when you replace large items such as appliances and furniture. They’ll usually come out with their truck and pick up your couch, dresser, old refrigerator or stove. Make sure you get a receipt from them. When you replace or update your computer equipment, don’t toss the old keyboard and software in a box out in your garage - find a charitable institution and donate instead. When you updated your cell phones - donate your old ones. Speaking of phones, if you text message or have to call people for a charity, save your phone bill and deduct those costs.
At the end of the year, you’ll be surprised when you add up all those receipts. Deductions you’ve previously overlooked can make a big difference in your tax refund.
If you need assistance filing taxes or calculating deductions for you or your business, contact our tax attorneys for help. Our Denver tax law firm also assists our clients with the best options for business formation, tax implications for businesses, employee tax issues, tax audits, tax litigation, personal tax garnishments, tax liens and levys, offers in compromise, and more. For more information on our tax lawyers and our tax services, visit our tax law webpage. From our offices in Denver, we serve clients throughout Colorado.
For more information on our other practice areas, including Business Law, Real Estate Law, HOA Defense, Foreclosure Defense, Estate Planning, Wills & Trusts, or Probate Law, and Credit Dispute, please visit our website at www.gantenbeinlaw.com, or call 303-618-2122.
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