With the previous year officially behind us, many have already begun looking ahead to and are preparing for tax season. With every new year comes new tax guidelines, and 2018 is no exception. Despite these changes though, one aspect that has remained largely unchanged is how one reports, and receives deductions for, their charitable donations.
The following are some considerations for reporting charitable giving on your tax return, however each taxpayer must check with their own personal tax and legal advisors for guidance on their own particular situation.
Whether you donate clothing, toys, or your old used vehicle, you may be entitled to a tax deduction. However, you must acquire an itemized receipt documenting the specific goods you donated, and remember that you can only deduct the fair market value of each item and cannot receive anything in return. Although it may be difficult to find the true market value of your belongings, it is imperative you get it right.
Although a majority of filers opt to take the standard deduction, which is a set dollar amount that, depending on one’s filing status, reduces taxable income. An itemized deduction, however, allows an individual to list out the qualifying expenses on their tax return, which can include charitable deductions. If the total of these expenses is greater than the sum of their bracket’s standard deduction, an itemized deduction is worth pursuing, as it will lower their adjusted gross income (AGI).
If you have chosen to donate a portion of your paycheck to the charity of your employer’s choosing, you must acquire a W-2 form that shows the total amount that was withheld for that cause, along with the pledge card that proves your participation. Otherwise, you will not be able to claim the sum as a charitable donation on your taxes.
By remaining cognizant of the above guidelines and seeking help from trusted professionals, you can complete your forms with few complications or headaches.