It’s that time of year again. The turkey leftovers are finally finished, Christmas lights are being dragged out of sheds and storage closets, and jolly fake Santa’s are in shopping malls all over the city. The holiday season is officially upon us.
For most people, this season is one of food, friends, family and above all else… expenses. The average taxpayer spends approximately 1/5 of their annual salaries on gifts and charities during this time of year. Although I cannot help you recoup the money spent on buying your Aunt Kathy yet another tin of caramel flavored Popcorn, I can assist you in making the most of your charitable contributions.
For taxpayers who choose to use the Itemized deduction on their income tax returns, certain charitable donations can be used to lower their tax liability. Donations made to religious, charitable, educational, scientific and literary organizations should be documented so the amounts can be used when calculating the taxpayer’s deduction. Donations made to organizations that are built to protect children & animals from cruelty are also qualifying contributions.
When we give to various charities and organizations, we usually donate more than just money. Millions of people take time to donate blankets to organizations that help the homeless, drop off toys for children in need, or even can goods so that local families will have a hearty holiday dinner. These types of donations more than qualify as deductions as well.
No matter what you are so graciously donating, be sure to take the proper steps to ensure that you can receive the highest deduction possible come tax time. Your records should have the name of the organization, the date of your contribution and the amount of your donation. When you are donating noncash items, the amount is calculated based on what it is worth on that day, this is called the fair market value.
The average taxpayer misses out on countless deductions and credits available to them. With tax laws changing every year, it can become a full time job attempting to keep up. This is where we come in, as tax preparers we make it our duty to know these deductions inside and out. If you ever find yourself overcome by that shoebox of receipts, allow us to be that light at the end of the tunnel.
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