Making charitable donations is one of the best ways to give back to your community, and yourself — but 70% of you don’t need to know that because you’ve already donated to charity in some form every year, according to the latest research.
Charitable donations can take just about any form, but the most popular are clothing donations. In 2011 alone, around 2 million tons of clothing and textiles were recycled or donated to a local or national charity throughout the US. Around 80% of donated clothing picked up by charities is given to the needy or used for funding purposes. So you know you’re doing a good thing by donating, but the other good thing? Tax deductions.
Many people still don’t know exactly how to donate or the inner workings of charitable donations, so these are the most common questions regarding the matter:
Is a charitable contribution tax-deductible? For the most part, yes. You will need to check with the IRS to see what qualified as tax-deductible first though. Be sure to get a receipt from the charity you’re donating to in order to write it off on your tax form later that year.
Should I make a donation by a certain time? If you want it to be tax-deductible on the year you donate it, then you must donate your items by December 31st to qualify for tax benefits. Many charities will accept donations any day of the week if you are on a time constraint.
Should I itemize my tax return to get a deduction? Yes, because donations are only tax-deductible this way. Here’s what to do: When you file your taxes, you will need to itemize your donations on Schedule A of the 1040 form which can be found on the IRS website. Be sure to keep track of what you’ve donated and when so this process is easier.
How much can I deduct from my taxes? You can only remove the amount of a contribution given voluntarily. You have the ability to deduct up to around 50% of your aggregate gross income, but there are some types of donations that have lower percentage ceilings — so you cannot deduct as much from taxes.
How can I donate as much as possible in a single year? First of all, talk with your financial adviser; they will be able to tell you how much you can donate this year. Many people find going online very helpful as well. Online websites will include a charitable giving calculator that can provide you with a rough estimate of how much you should give.
