Making the most of tax-deductible contributions

Making the most of tax-deductible contributions

On Behalf of | Jul 29, 2022 | Charitable Giving

Many people in New York make a point of donating to charity each year. There is a wide range of tax-exempt organizations in the United States, whether they engage in educational and cultural programs, support charitable deeds or promote religious activity. However, there can also be tax benefits for donating to a cause, in addition to the satisfaction that comes with supporting an issue that you care about. Tax-deductible donations include money or goods donated to a tax-exempt organization, and these deductions go to reduce your taxable annual income.

Itemized vs. standard deductions

In order to claim larger donations, you must generally decide to itemize your deductions when preparing your taxes. For some people, it may be more beneficial to itemize while others may benefit from the standard deduction, and a tax planning professional can provide guidance in this regard. You will want to determine whether your deductions when itemized will be greater than or less than the standard deduction. However, for the 2021 tax year, single people can deduct up to $300 in charitable donations and married couples can deduct $600 as “above the line” deductions without needing to itemize.

Keeping track of your contributions

To make sure your contributions are tax-deductible, make sure your donations are going to a 501(c)(3) tax-exempt organization. These organizations are diverse and address many different social issues and concerns, and you can verify a particular organization’s status by checking the IRS website or asking the organization. If you donate $250 or more in cash or property, the charitable organization will send you a receipt for your donations before your tax filing date.

There are some tax deductions that you can take for volunteering, even though you cannot deduct the value of your labor or time. You may be able to claim deductions for mileage and other actual expenses directly related to the volunteer activities, so long as you keep track of your receipts and documentation.

Read More