Tips for Keeping Track of Your Charitable Deductions
With tax season over, you’re likely left thinking about all of the efforts that went into determining what your charitable deductions were over the course of the past year. Without well-kept records, looking back and taking an inventory of your charitable contributions can be a tremendous hassle; but with a little planning and a little effort made throughout the year, calculating your charitable contributions come tax season will be a breeze. Here are a few tips for tracking your deductions throughout the course of the year.
Start a Tax File
If you don’t have one already, take the time to set up set a tax file where you can keep physical tax receipts and lists of donated items. It will take only a few minutes, and it will make the idea of keeping records of your charitable deductions much less daunting.
When Donating Household Items
Donations of household items are among the most common of charitable deductions. Whenever you’ve garnered a collection of household items that you’re ready to donate, take a thorough inventory of these donations, write out a list, and record the estimated fair market value of each item. Some free websites are even designed to help you with this part of the process. Then, upon your donation, be sure to ask for a tax receipt and to record the estimated total value of your donation on this receipt. Attach this receipt to the inventory list you created and to keep both things in your designated tax file. It’s also always a good idea to take a photo of the items you’re donating—both to better serve your memory and to serve as visual proof in the event of an audit.
When Making Cash Donations
When donating money to an organization whose donations are tax deductible, it is best to do it in check or credit/debit card form, where there will be a record in your bank statement of your contribution. Cash is simply more difficult for you to track. In those cases when cash is your only option, be sure to obtain some sort of receipt from the organization that contains the name of the organization, the date, and the donation amount for your records. If your donation was $250 or more, an organization is required to provide you with written acknowledgment containing this information.
Tracking Other Charitable Contributions
Don’t forget that one often-overlooked tax-deductible charitable contribution is expenses made during volunteer work that was not reimbursed to by the charitable organization. This means that you need to save gas and other receipts involved in your volunteer work and that you need to be mindful of just how much on each of these receipts is going towards the organization you are volunteering for. These are all other great candidates for your tax file.