The holiday season is the season of giving — giving to your loved ones, giving to your coworkers, and giving to charitable organizations. As you’re doing so, remember that your generous donations can mean money back in your pocket when tax season comes around.
In order to make the most of charitable giving, these are a few things you may want to keep in mind.
1. Keep your receipts.
You may need to prove the donation, and you may also refer to them as you’re filing your taxes. You will also need these documents in case you are ever audited.
2. Research every organization you donate to beforehand.
To be considered tax deductible, an organization must be a nonprofit religious, educational, or charitable group. These are often known as 501(c)(3) organizations, which you may research through the Internal Revenue Service website.
You also should research the organizations in order to determine how much of your money will be used for the intended benefit. Additionally, as you research the group, you can determine whether or not it is in line with your principles.
3. Set up automatic donations or have donations deducted from your paycheck or credit union account.
Automatic withdrawals allow you to contribute on a regular basis, and you will always have a record of the transaction.
4. Think of donating possessions rather than money.
Donating items rather than money allows you to help others while decluttering. You may be able to claim such donations if the charity is a qualified organization and your donation meets other applicable requirements.
Many homeowners are accustomed to donating shoes and clothing, which is definitely admirable. However, there are many more items around your home, vehicle, and workplace that can be donated as well. Spend some time to research different organizations to determine which ones could use each item. Depending on a variety of factors, items that may be donated include:
- Clothing, shoes, and outdoor wear such as hats, gloves, and scarves
- Dishware and silverware
- Pots and pans
- Vehicle parts or entire vehicles
- Cellphones, computers, and other technology
- Bicycles, toys, and games
- Linens and bedding
- Small appliances such as toasters and blenders
- Large appliances such as washers, dryers, and refrigerators
- School and office supplies
- Baby products such as swings, strollers, and car seats that are still safe and reliable
- Sports equipment
It’s important to note that the value of the donation makes a difference in how you would claim it on your taxes. Talk with a qualified accountant, tax adviser, financial adviser, or credit union associate about how to claim donations and if your donations qualify for deductions.