More and more often E&Y Tax Preparation Services is noticing large companies and media efforts becoming heavily invested in big marketing promotions for charitable causes and foundations. However, before you assume that every dollar you shelled out towards a good cause will be tax deductible, E&Y Tax Preparation Services answered a few of the most common charitable questions.
Do I qualify for a charitable deduction?
For the most part, any money that is donated to a qualified or registered charity or religious organization can be written down as a deduction on your taxes. However, the tricky part comes into whether you can itemize or not. While we always suggested consulting E&Y Tax Preparation Services for your charitable deductions and itemizing, we have a few tips:
- Determine the total value of every deduction you made last year.
- Does this amount value higher than the standard deduction? (This amount will depend on if you’re filing as a single or married entity)
- If it is higher than the standard deduction amount, then you’ll definitely want to itemize, in order to maximize your charity deduction.
What qualifies as a charity?
Luckily, the IRS is willing to help you figure out whether your donation contributed towards a charity or not. This charity tool will determine if the organization is a nonprofit or is tax-exempt, and will generally make it a deduction. If you give money to a family or individually directly, regardless of the reason, this does not qualify as a charitable deduction.
What if I didn’t donate money?
Unfortunately, you cannot deduct time spent volunteering for a charity or religious organization. However, you can deduct the financial elements that played into your ability to donate time. Amount spent on gas and mileage to and from your volunteer service can be deducted. Additionally, if you donated clothing or household items, this should be documented on your tax return. If you donate property or items that are valued more than $5,000, you will be required to provide documentation on their appraised value.
How do I organize my deductions?
If you provided cash donations that are $250 or less, you can provide anything from a receipt from the organization or a bank statement, documenting your financial contribution. However, if you donated more than $250, you will also need additional and specific documentation for the IRS and your tax return. For more details on how to organize your documents for deductions, follow the IRS guidelines or let E&Y Tax Preparation Services help get your charitable deductions on track!
