Are you a New York resident who is looking for ways to reduce your taxable income this year? If so, you may want to consider making charitable donations. These donations can help you maximize your tax deductions and lower your tax bill when done correctly. Here’s a look at five ways that you can use to make the most of your charitable contributions.
1. Think beyond cash as a donation
Instead of giving cash from your income to charities, consider your other assets like bonds, mutual funds, and stocks. This is because the IRS can eliminate capital gains taxes when you donate your appreciated long-term assets to your preferred reputable charities.
2. Choose the right charity
Always choose a charity that the IRS approved. This way, you can be sure that your donation will be tax-deductible. You can search for qualified charities on the IRS website or use a service like GuideStar. When in doubt, always check with the charity directly to determine if they are qualified.
3. Get a receipt for your donation
For any donation you make, whether it’s cash, clothes or food, be sure to get a receipt from the charity. This receipt should include the organization’s name, the date of your donation and a detailed description of the donated items to claim your deduction.
4. Keep track of all donations
Keep track of all your charitable giving and tax planning activities throughout the year. The best way to do this is to create a folder or file where you can store all receipts and acknowledgments from your donations.
5. Don’t forget about mileage and other expenses
If you perform volunteer work for charity, the IRS can deduct your expenses spent on fuel, oil, and parking during that time. Just be sure to keep track of your mileage and have a record of where you drove for charitable purposes.
If you haven’t been taking advantage of your deductions, you should know that you can carry them forward to the next year if you qualify. However, this only applies to unused deductions over a period of five years.