I was chatting with wonderful old friend tonight and helping her with some year-end tax advice, when I found out that she had some misconceptions and missing knowledge about how charitable contributions and volunteer deductions work. I realized she might not be the only one, so here I find myself inspired to spread the word during this time of holiday cheer and giving.
Volunteering — did you know you can deduct 14-cents-per-mile when driving on behalf of a charitable organization during your volunteer work? For example, if you pick up meals from a soup kitchen and deliver them to folks around your city, you can deduct that mileage as a charitable contribution. Or if you drive to visit an elderly person for a regular visit as part of a non-profit Eldercare program. Or if you drive to pick up organic plant seedlings to be sold by a non-profit community garden or a group like Slow Food. The list goes on! Just make sure to log the date, location, number of miles, and purpose (same info as for business mile tracking for the standard mileage deduction).
Non-Cash Charitable Contributions — my friend got the wrong idea from her accountant that it’s somehow difficult or inadvisable to deduct $250 or more when giving away old clothing, household items, or other Goodwill/ Salvation Army/ Brown Elephant-type stuff. Not true! All it means is that you have to fill out an extra form on your tax return that lists the following: what types of items were donated; the fair market value (how much would the usual consumer buy it for at a thrift store); the date of contribution; the name & address of the donee. Thing is, you should be keeping this information anyway, even if the donation was under $250. Only difference is that the IRS requires it to be noted on the tax return for $250 or above.
People often underestimate the value of these used items. I just use a spreadsheet with columns: ITEM; VALUE; QUANTITY; TOTAL (quantity times value). Then I add up the TOTAL column. Easy peasy. However, I’ve also worked with clients who use the tool “It’s Deductible”, by Intuit which has a free version they use to try to entice you into buying their Turbo Tax product. But it’s a good tool, worth trying — https://turbotax.intuit.com/personal-taxes/itsdeductible
Charitable Contributions via cash, check or credit card — Lastly, here’s a nice little list of tips from the IRS on deducting Charitable Contributions. It’s such a great way to lower your tax bill, and give back to the causes that move you, or to “invest” in your own community. Don’t forget to check out your charities on http://www.charitynavigator.org to make sure they’re using your dollars efficiently. Happy Giving!