The good thing about waiting for a hurricane to pass through your city is the amount of catching up you get to do with friends! In one of my many hurricane inspired conversations, I took the opportunity to share the upcoming New York Cares Happy Hour Fundraiser. As I explained the event’s purpose, the raffle items and the ticket prices, I threw in “..and oh yeah the cost of the admission and raffle tickets are tax-deductible.” My friend replies, “Word? I had no idea. I need more tax deductions!”
It never occurred to me until that moment, perhaps the reason some people don’t give is because they don’t realize the positive affect it has on their income. Well, let me enlighten you today my friends, charitable donations are the best gifts you can give to yourself when filing taxes! You don’t have to be rich for charitable donations to be a tax break. Practicing acts of philanthropy now will help you become a better giver when your wealthy days arrive!
Charitable donations in their simplest form are just that- donations. However, the government recognizes the sacrifice you are making by giving to those less fortunate by giving you a break come tax season. Who can blame you for being grateful for the tax break that comes along with giving? Now don’t get me wrong, everything doesn’t count as a tax-deductible gift. You must itemize your gifts and based on your income you must give a certain amount for it to really impact your taxes– but trust me every bit counts! As long as you are donating to a legitimately filed and documented 501(c)(3) organization, getting your break will be a breeze. Let’s take a look at two major ways to give so you can start to get right for 2011 and prepare for 2012:
1. Non-Cash Contributions
Otherwise known as clothing, furniture and, yes, even old car donations, non-cash donations are easy to give because you have them already in your possession. Often requesting new or gently- used items, organizations such as Goodwill or Salvation Army are popular drop off locations. And just like when you leave a store make sure you get a receipt for the value of your donation. Most likely when you file your taxes you won’t need the receipt but if the donation is over $250 you will want to have one just in case you are audited. Hey, you never know! Oh, and my rule with donating clothing is simple: Just because I don’t want it doesn’t mean that it has to look like it. Only donate items you would be proud to still wear if you had room in your closet. If it’s too worn or soiled, just chuck it.
2. Cash Contributions
Don’t be afraid to give the green! The greater your contributions, the greater the tax deductions. It’s one of those relationships that work for one another all the way down the line. The cash donation can be in the form of a fundraiser ticket, raffle or silent auction item, city park or museum membership, an individual donation, annual gift, etc. etc. (Remember, political donations do not count!) In lieu of a receipt for tax verification, you will usually get a letter from the organization thanking you for your gift with the stated amount and/or an annual gift letter which will contain your total gifts to the charity. If you ever need documentation, feel free contact the organization’s development office. They should be happy to get you letter.
Once you’ve collected all of your non-cash and cash donation receipts walk them down to your tax person along with your 1040 form and watch your taxable income and tax bill decrease right before your eyes. So yes, the $50 ticket for your girlfriend’s fundraiser and the $10 donation to your co-worker’s “Walk for a Cause” (for the third time this year) and the donation of your 2009 wardrobe pieces valuing well over $200 will surely do you some good come April 15th.
So start now by giving to causes found on my Giving Made Easy page- or any charitable cause of your liking. You’ll thank me for it later!
And shout out to Bey and Jay on the baby bundle on the way! I wish I had a way to make this relevant to this post…but I don’t. Mazel tov anyway!