Good Deeds, Good for Taxes

The holidays are the time of giving and when many people choose to help those in need by making donations to favorite charities.  Did you know that these contributions can actually reap benefits for you?

You’ve probably heard the phrase “write off” or “deductible expense” but many people don’t fully understand what that means. Simply put, the purpose of tax deductions is to decrease your taxable income, thus decreasing the amount of tax you owe to the federal government. 

Any charitable contribution is tax deductible up to 50 percent of your income. And you can get tax savings with non-cash donations as well.  Eligible deductions include the purchase of a new coat for a coat drive or food for a food drive, or making a donation to Goodwill, Salvation Army or other charities that accept gently used items.   Follow these tips to make the most of your charitable deductions:
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• Get a receipt from the charitable organization, even if it is a cash donation.
• Check the IRS website to see what type of organizations qualify as eligibile charities.
• Be prepared to itemize your gifts on your 1040 form so keep a list of all of your donations.
• Consider donating appreciated assets, like stock, which can result in a double benefit.
• While voluteer time is not eligible, expenses associated with volunteering, like travel time, supplies, uniforms, etc, may be eligible.
• Talk with your accountant to make sure you are making the most of your charitable contributions before tax season.

Source: Forbes.com and CNBC.com