What time of year do most people think about their taxes? January and February, when those tax documents start coming in the mail? March? Or is it April when you start hearing about promotions for free coffee from Dunkin Donuts on April 15. What time of year SHOULD most people think about their taxes? The answer is NOW. Now is the time you should thinking about your current tax year and the different opportunities left available to you to minimize your tax income.
One thing that is easy for us moms to do is to start cleaning house. We are all constantly cleaning anyways, right? How many of our kids pants are up to their calves (my sons definitely are!)? Or have you lost all your baby weight and need to get rid of those bigger clothes? Why not help out your local charity, but your tax situation too? It’s time to make some donations. And what better time than around the holidays, when we are all in the giving spirit. Charitable contributions are a great way to get extra deductions in before the end of the year, cash or noncash. Here are some tips to take advantage of this tax deduction.
- In order to qualify for a charitable donation deduction, you first have to itemize on your tax return.
- In making your donations, the most important thing to remember is to get a receipt and have documentation. Any cash or property contribution of $250 or more is required to have a receipt. Make sure that any receipt (including any church donations) states that no goods or services have been provided in return for the contribution. Canceled checks help, but are not sufficient.
- If you are donating noncash items that total over $500, such as clothes, toys, household items, etc., you must be able to estimate both the cost and fair market value of the items you are donating. Be specific. Five shirts valued at $5 each bought for $15 each, etc. Additional forms are required to be completed with your tax return for contributions of $500 or more.
- In the event that you are asked to substantiate your charitable contributions by a taxing agency, the key is documentation, documentation, documentation–save your receipts!
Making contributions is a great way to get a few more deductions in before the year is up, as well as supporting your favorite charities. I know my kids have too many toys and clothes that they don’t use anymore that another child could use. It’s a win-win situation. There’s still time, so start donating and documenting!
Check out these local charities that are accepting donations for the holidays!
Bright Holidays – Bright Holidays, a recognized public charity, helps underprivileged students and families in the greater Jacksonville area during the holiday season.
Hubbard House – Each year, your generosity means happiness for hundreds of families who are experiencing violence in their homes. For children who have been affected by domestic violence, holiday joy is often more a wish than a reality. Hubbard House offers a variety of holiday donation opportunities for you to help make the holidays brighter for families in crisis.
Additional charities can be found here!
For more information on charitable contributions see Publication 526.