One of the more popular end-of-the-year activities is to
make charitable contributions. Donating to charity is a win/win: the donor may
receive a tax deduction, and the charity collects much-needed funds. But
charities need money year round, and you can ease your pocketbook in December
if you spread your donations throughout the year.
Many charitable organizations allow, and in fact, encourage
donors to set up recurring donations. You can have a designated amount automatically
transferred from a bank account or charged to a credit card at a designated
interval, such as monthly or quarterly. Recurring donations help charities
better plan their programs, as well as allow you to budget your support for
causes you care about.
In order to deduct charitable contributions on your tax
return, you must file Schedule A of the 1040 form. The contributions must be to
a qualified charity, such as a religious or government organization, or a
nonprofit group with 501(c)(3) status. You must keep a record of what you've
given; for example, a canceled check, a receipt from the organization, bank or
credit card statement naming the organization, date, and amount.
Many charitable organizations desperately need volunteers as
well as donations. If you do volunteer work, keep receipts for any unreimbursed
out-of-pocket expenses you incur in the course of this work, as well as a log
of mileage you've driven in your own vehicle on behalf of the charity. Don't
worry if you forget to write down your mileage at each stop; fill in the gaps
later with MapQuest or Google Maps. The important thing is to keep track of the
date, destination, and purpose of the trip. If you volunteer regularly, these
expenses add up, and tracking them will enable you to increase the amount of your
charitable deductions on next year's tax return. Start today!
What charities do you support? What tips do you have for
making the most of charitable deductions?
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