How to Make Sure Giving Back Counts at Tax Time
There are those who enjoy crunching numbers, and those who would love to be doing anything else. With March underway and April just around the corner, you may be dreading a certain time of year that’s all but looming—tax time.
Luckily for you, tax time isn’t all bad. As it turns out, doing good in the world can have a positive impact on your taxes! If you were dedicated to helping a certified 501(c)(3) organization in 2020, there are ways for you to benefit on your tax return. Check out how you can keep track of your charitable contributions throughout the year, as well as what you can write off come tax time.
Make Sure It Counts
To be considered for any sort of tax deduction, an organization must have a 501(c)(3) status and be recognized by the Internal Service Revenue. Do a quick Google search or check the IRS website to ensure that the organization you volunteered for, or donated to, is in good standing in order to be recognized on your tax return. If the name is on the list, you’re good to proceed.
As with all tax documents, you should keep a record of the money you contributed throughout the year, as well as documented volunteer opportunities you completed. Whether the receipts are paper or electronic, ask the organization for documentation if it has not already been provided. This includes any receipts for volunteer tracking, not just donations.
Write Off Your Donations
You did a great thing by donating your hard-earned cash to help a nonprofit in need, and that act does not go unnoticed. Make sure you have records from the organization that include the date and amounts given. That way, you can write off these charitable donations during tax time. Once again, make sure the charity is on the list of organizations laid out by the IRS and consult your tax advisor.
Write Off Volunteering and Related Expenses
Many people are aware that they can write off donations they make throughout the year. However, your time is also valuable when it comes to tax season. If you contributed out of pocket to volunteer throughout the year, you may be able to receive a deduction.
For example, if you used your car for charitable activities, you could deduct a flat rate for gas mileage. If you needed to travel primarily for the work of the organization, you may be able to write off those costs, as well. Just like your donations, you’ll need some form of receipt showing that the volunteer activities occurred. Write down as much detail as you can related to the volunteer opportunities, and make sure you can get official documentation from the organization confirming your volunteer duties and the dates specified. If you have related receipts, save them and use them to confirm if necessary.
As always, please consult your tax advisor to ensure that you are correctly documenting your giving and volunteer time, as well as to ensure that you are writing off the appropriate items. We see you doing your part to make the world a better place, and that doesn’t go unnoticed. Make sure to take the opportunities available on your taxes to give yourself a break.