The holidays are a time of giving, and you may be considering ways to make a difference in your community this time of year.
When you donate time, goods and money, you not only help your community, you can see a benefit on your taxes. The government rewards individuals and groups by giving tax incentives for charitable activities. Use this guide to help you document and claim what you do to help.
Partner with a reliable organization
One of the most effective ways to make a difference in your community is to partner with an organization that is doing good work and has already laid the groundwork to make a lasting difference. Once you get to know the nonprofit and how it impacts your community, you can continue to be involved into the future.
First, take a look at the charities in your city. If you have a particular connection to a cause, like homelessness, certain illnesses, or low-income family welfare, choose an organization that contributes in that field, so you can stay invested in the important work.
Use official channels to verify an organization's nonprofit status and how effective it is. You can search for organizations that meet the nonprofit criteria by searching the Internal Revenue Service charity database. Your donations to these organizations can be written off in your itemized deductions when you file your taxes.
Volunteer in the community
For many people, volunteering time is a rewarding way to get involved in the community. If you are physically able, serving meals at a food bank or collecting toys for children at a holiday drive can be a good way to give back.
Many don't realize it but, even though you cannot write off your time volunteering, you can itemize out-of-pocket expenses you incur to do good work. These expenses include materials, supplies and even gas — at the rate of 14 cents per mile.
Give to nonprofits
Donating money is another great way to both help others and to help your family by providing you with some tax write-offs.
Avoid future confusion by properly documenting your donations: After you've selected a charity, note that your contribution can't exceed 50 percent of your adjusted gross income. If you want to gift property, the cap is lower, as it cannot be valued at more than 30 percent of your AGI. To document and receive credit for your monetary donation to a charity, fill out Form 8283, and attach it to your return.
Remember, if you receive any gifts in exchange for donating to a charity, you can write off the cost of your donation minus the value of the gift.
This holiday season, take advantage of these tax write-offs, so you can maximize your donation to your community, and help your family come tax time.
