It’s the most wonderful time of the year! During the holidays, many people open their hearts—and wallets—to others in need. But being generous doesn’t always come with a guaranteed tax deduction. The tax experts at TSLNH offer five tips on making the most of your charitable donations:
1. Make your charitable donations to a qualified organization.
Only donations to qualified charitable organizations are tax deductible. To find out if your charity of choice qualifies, use the IRS Exempt Organizations Select Check tool. Gifts to GoFundMe personal campaigns, for example, are not tax-deductible. However, donations made to GoFundMe Certified Charity campaigns (valid for US registered 501(c)(3) charitable organizations only), are tax-deductible. If you have questions about your charitable contributions and tax deductions, contact the professionals at TSLNH.
2. Itemize your deductions.
Any deductions you claim on your tax return must be itemized. Report your itemized deductions on Schedule A of Form 1040, using lines 16-19.
3. Maximize your deductions.
“Don’t short-change yourself when donating your clothes, furniture, and other household items. You’d be surprised at how much you can deduct for things you no longer need or want,” says Melissa Laverty, founding partner at Tax Services of Londonderry NH. To make the most of those bags you give to Goodwill and other thrift stores, use this Donation Value Guide.
4. Keep your charitable donations receipts.
As the saying goes, figures don’t lie, but liars figure. Keep all charitable donations receipts and cancelled checks so you can prove your deduction if you’re ever audited by the IRS.
5. Pay attention to your calendar.
If you want to earn a year-end tax deduction, make your charitable donations need to be made by December 31. But that doesn’t mean the cash has to be out of your account. For example, any charitable donations made via text are deductible in the year you send it if they are charged to your telephone or wireless account. Likewise, credit card charges and checks written before the end of the year qualify for a deduction in the current tax year, even if they are not paid off or cashed before December 31.
Help Understanding Charitable Donations and Tax Deductions in NH