How To Record Charitable Giving For Tax Purposes
Giving to charities is a noble endeavor. You're helping the needy, providing vital assistance to organizations that do good work in a wide variety of different ways. The government wants to encourage this behavior, and so many donations to charities are considered tax deductible. But what does this mean? How can you track what you're donating? How does everything fit into your overall personal income tax statement?
Standard Deduction Vs. Itemized
The first thing to understand is that not everyone will benefit from listing giving on their return. There are two ways to go with your return. The first is to itemize, which means you list any qualifying deductions individually, totaling them up and receiving that much off of your payment. The other option is to take the standard. Unless you've done an exceptional amount of giving or have substantial other qualifying expenses, it's most common to have the standard be the larger of the two by a fair amount. Applying the standard will take that much off your payment automatically, without having to go through the more complex steps of itemization. However, doing so will also make you ineligible to claim charitable giving and other expenses which would have been itemized. It's not a decision you should make on your own – bring all applicable forms and receipts to your professional preparer and let an expert make the call.
Always Get Receipts
Regardless of whether you plan to use it on your return or not, you should always get a receipt for everything that you donate. It's common to think of this for money and goods, but it can apply to much more than that. If you're donating your time, or your vehicle's mileage, for the cause, make sure that you get it recorded. One of the biggest hurdles in claiming this kind of service is a lack of supporting documentation. A lot more can be written off than one might expect, but without a receipt to prove it, you'd be hard pressed to have it stand up in the event of an audit.
Keep Everything In One Place
Centralizing all of your information will make it a lot easier to organize things when it comes time to actually fill out forms. This is true regardless of whether you intend to file from home or visit one of the tax locations in Columbus, Cleveland, or any other nearby town. Having everything on hand immediately makes determining whether to itemize or not a much easier call, and will ensure that there are no questions left unanswered about amounts or anything else.
Standard Deduction Vs. Itemized
The first thing to understand is that not everyone will benefit from listing giving on their return. There are two ways to go with your return. The first is to itemize, which means you list any qualifying deductions individually, totaling them up and receiving that much off of your payment. The other option is to take the standard. Unless you've done an exceptional amount of giving or have substantial other qualifying expenses, it's most common to have the standard be the larger of the two by a fair amount. Applying the standard will take that much off your payment automatically, without having to go through the more complex steps of itemization. However, doing so will also make you ineligible to claim charitable giving and other expenses which would have been itemized. It's not a decision you should make on your own – bring all applicable forms and receipts to your professional preparer and let an expert make the call.
Always Get Receipts
Regardless of whether you plan to use it on your return or not, you should always get a receipt for everything that you donate. It's common to think of this for money and goods, but it can apply to much more than that. If you're donating your time, or your vehicle's mileage, for the cause, make sure that you get it recorded. One of the biggest hurdles in claiming this kind of service is a lack of supporting documentation. A lot more can be written off than one might expect, but without a receipt to prove it, you'd be hard pressed to have it stand up in the event of an audit.
Keep Everything In One Place
Centralizing all of your information will make it a lot easier to organize things when it comes time to actually fill out forms. This is true regardless of whether you intend to file from home or visit one of the tax locations in Columbus, Cleveland, or any other nearby town. Having everything on hand immediately makes determining whether to itemize or not a much easier call, and will ensure that there are no questions left unanswered about amounts or anything else.
Source...