The constant changes to the tax code are enough to make people’s heads spin. It is confusing to keep track of what can be deducted and what cannot, especially when it comes to charitable donations. Fortunately, friendly and helpful tax attorneys are available to answer questions, so you know where you stand with your charitable donations and how they can help to reduce your taxes.
Table of Contents
1. What can I deduct from my taxes?
There are several things you can deduct from your taxes, but you must reach monetary thresholds that are over the standard deduction. In 2020, the standard deduction varies based on whether you are a single, head of household, or married. If you have expenses that exceed the standard deduction, you can deduct items like mortgage interest, state and local taxes, charitable donations, and medical and dental expenses.
2. How much do I need to donate?
If you plan to donate enough to exceed the standard deduction, you must donate more than $12,400 if you are a single filer. In order to claim more than the standard deduction, you must have itemized deductions that exceed the standards.
3. How do I prove I made a donation?
If you make a donation, you must have proof. The organization must be charitable, and have a tax ID that shows it. They are usually labeled 501(c)(3) charities. Then, you need to keep a record in the form of a tax receipt. If you donate an item, that item should be appraised to prove its value. Check out Donorbox’s guide on How to Start a 501c3 Nonprofit.
4. What is the most I can donate?
The most you can donate is the equivalent of your annual income. So, if you make $50,000 annually, you can donate your entire $50,000 salary.
5. What organizations qualify as charitable?
Before you make a donation, your tax attorney or CPA can check to see that the charity qualifies. It is important that you have proof of the donation, and that the receipt includes necessary tax information like the 501(c)(3) status. Some organizations qualify even though they do not have 501(c)(3) status, like churches or religious organizations.
6. Can I deduct items I donate?
You usually can, but it is important that the items are appraised so you have proof of the value, especially if the item is worth more than $5,000. The IRS requires an appraisal for items over that value. Your tax attorney can help you donate items appropriately.
7. Can I donate my time and deduct that?
There are rules for employers who have employees who volunteer their time, especially during the work day, as they are not collecting payment during that time. Some companies can deduct expenses for that time. Your tax attorney will know how to do that. If you are volunteering your time as an individual not associated with a business, it is a good idea to talk to your attorney about whether you can deduct the value of your time or not.
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