Virginia Beach, VA (PRWEB) February 21, 2012
Many taxpayers cheat themselves out of valuable charitable deductions by underestimating the value of items given away, or not hanging onto receipts.
“You cannot deduct the value of your time, but if you’re a volunteer, you can deduct your out-of-pocket expenses and volunteer mileage at 14 cents a mile,” said John Hewitt, CEO of Liberty Tax Service.
Here’s a Liberty Tax checklist of tips for giving to charities, and receiving the greatest tax benefit:
Keep better records: The charitable contribution will be disallowed for any monetary contributions unless the donor maintains a record of the contribution. This applies to any contribution of money, regardless of the amount. Be sure that you have bank records, cancelled checks or written acknowledgements for all cash contributions that show the name of the charitable organization, the date and the amount of the contribution. For monetary donations or items over $250 in a single donation, the IRS requires an additional written acknowledgement from the organization. Taxpayers claiming over $500 for all contributed property must complete and file Form 8283, Noncash Charitable Contributions.
Hold onto your pledge cards: Taxpayers who have had charitable contributions deducted from their paychecks are required to hold onto their pledge cards from the charity, pay stubs, and their Form W-2 or other employer information that states the total amount of donation. Be sure to have bank records, cancelled checks or written acknowledgements for all cash contributions that show the name of the charitable organization, the date and the amount of the contribution.
Figure and declare the full value of the donated item: When declaring the value of donated clothing or items for tax purposes, determine the fair market value. This can be the price the item might sell for at a garage sale or thrift store. IRS Publication 561 Determining the Value of Donated Property is a good source to use. For monetary donations or items over $250 in a single donation, the IRS requires an additional written acknowledgement from the organization. Taxpayers claiming over $500 for all contributed property must complete and file Form 8283, Noncash Charitable Contributions.
Be sure the charity is recognized as legitimate by the IRS: Check that your donations are made to a charity or non-profit organization that the IRS considers legitimate. Approved non-profits include those whose focus is religious, charitable, educational, literacy, preventing cruelty to children and animals, or serving military veterans. Even some Mexican and Israeli charities are eligible through treaties with those countries.
Taxpayers can generally deduct up to half of their adjusted gross income in one tax year: The IRS allows generous taxpayers to carryover deductions that exceed their charitable contribution amounts for up to five years.
Deduct your mileage or actual costs of transportation and from charitable events:
Charitable mileage is deductible in 2011 and 2012 at 14 cents a mile.
Hosting a foreign exchange student: Taxpayers who have written agreements to host students may be able to deduct $50 a month for expenses.
Uniform maintenance is deductible: If uniforms are required for volunteer service, the costs of cleaning and maintaining them are tax deductible as a charitable contribution.
About Liberty Tax Service
Liberty Tax Service is the fastest-growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 9,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service.