In New York, you can take tax deductions for charitable giving on your income taxes, but there are several conditions in place. Before donating, it is essential to understand what these conditions are and plan accordingly.
Limits on donations
In most situations, you can’t exceed 60% of your adjusted gross income (AGI) for your charitable giving deductions. You can certainly donate more if you want, but you cannot make any further deductions past your cap. This limit is as low as 20% of your AGI, depending on your circumstances.
Itemized versus standard deductions
When you file your taxes, you must choose between standardized and itemized deductions. You won’t be able to take the standard deduction if you choose the itemized route. If your total eligible deductions are higher than that tax year’s standard deduction, then you may want to itemize. In 2022, the standard deduction was $12,950 for single filers.
Planning ahead pays
Most taxpayers find that they notice the biggest impact on their tax bills by planning what they’ll spend their money on for charitable giving. You might want to check what income bracket you’ll be in for the next tax year. If you bumped up to a higher bracket, then you may be able to drop back down through charitable giving.
The IRS requires that you keep receipts of your donations. You may want to hold onto the receipts in a folder for six years in case the IRS audits you. Tax audits happen to honest people just as they do to those who lied on their taxes.
You can deduct vehicle expenses if you drove your car during volunteer work. The IRS allows you to choose between a deduction of 14 cents per mile or the precise costs of the gas. Most people find it easier to use the former method.
Before you begin donating, you might want to ensure that you know all the conditions first to strategize well. A lawyer or an accountant can also assist you to make sure you do not wind up making any costly mistakes.