Wednesday, February 16, 2011

You Wouldn't Leave Dollar Coins On The Ground ... Why Do It On Your Tax Return?

Chances are you do little things here and there for charitable causes that you forget about.  It's one of the few tax deductions that isn't limited by income or AMT.  Here's an easy way to make sure you don't forget some of what you're entitled to claim ...

Keep a clasp envelope labelled "Charitable Contributions" in a handy place you can access easily all year.  Whenever you donate $5, $10, $20 or whatever to a charity during the year, put the receipt you get in this envelope.  Then write the date, the charity name, and the amount on the outside of the envelope.  At the end of the year, simply total the amount on the envelope and you'll be ready with that deduction for your tax return.  If you get audited, you're ready with the receipts proving your deduction inside the envelope.

While you're at it, make sure you include the "other" charitable deductions you do.  If you donate clothing or household items to a charity, make sure you get a receipt and record it right away in this same envelope. 

If you volunteer to help a recognized charity, whether it's a one time project or done often, you can't deduct the value of your time but you can deduct any out-of-pocket expense you have such as supplies or car mileage to drive to and from the charitable project.  So be sure to record those in this envelope as well.

Even if there is only $50 recorded in this envelope at the end of the year, that is worth a minimum of $5 in your pocket in tax savings on your return.  It's probably worth more.  It only takes a moment each time you do something ... once you start the envelope.

You wouldn't leave dollar coins on the ground if you saw them ... why leave these legitimate deductions off your tax return?

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