You answer calls to support your alma mater, the local animal shelter and the American Red Cross with gifts of money and volunteer time. And after cleaning out the closets, dressers, kitchen cabinets and garage, you take a trunk load of donations to the thrift store.
You know your gifts of cash, time and household items may be tax deductible, but what do you need to do to verify that and maximize your deduction?
"Being charitable can cut your taxable income, as long as you follow a few simple rules," says Jessi Dolmage, spokesperson for popular digital tax preparation brand TaxAct. "Those include giving to eligible organizations and keeping accurate records."
To determine if you've donated to eligible organizations, search the IRS' database of Exempt Organization Select Check at www.irs.gov. Most religious organizations and government agencies are eligible, even if they're not listed in the database.
Keeping detailed records is important for accurate valuation of your gifts (and in turn your tax deduction) and in the unlikely event of an audit. Dolmage says records should include organization name, donation date and amount.
For monetary gifts, keep the written acknowledgment from the organization with the donation date and amount. A canceled check or card statement with the transaction date also suffices for gifts under $250.
If you receive merchandise, benefits or privileges in exchange for a gift, you must subtract the value of those from the original gift amount. If your payment is more than $75, the organization must give you a written statement with a description and estimated value of the merchandise, goods or services.
For noncash donations, document the charity name, date and location of the items, along with a reasonably detailed description of the items. If you receive a receipt from the charity, keep it with your records.
The IRS requires additional documentation for vehicle donations. You must receive a written acknowledgment or Form 1098-C from the charity for the vehicle.
Noncash donations, such as clothing, kitchen gadgets and furniture, must be in good condition or better. The tax-deductible amount of those items is the fair market value (FMV), the price if they were exchanged between willing buyers and sellers. Special rules apply to donations of cars, boats airplanes, property subject to debt, investments that have appreciated in value and inventory from your business.
Mobile apps can make tracking throughout the year painless. Donation Assistant by TaxAct tracks cash, noncash and recurring gifts, with FMVs for more than 1,300 commonly donated household items. You can also save photos of your donations and receipts. When doing your taxes, import the information and TaxAct Deluxe will calculate your maximum deduction and complete your tax forms.
You can deduct charitable gifts you made between Jan. 1 and Dec. 31 only if you itemize deductions on Form 1040 Schedule A. In order to itemize, all of your itemized deductions must exceed the standard deduction amount based on your adjusted gross income and filing status.
Additionally, you must file Form 8283 if your noncash contributions total more than $500, and include a qualified appraisal of property worth more than $5,000.
April 10 — Employees who work for tips
If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.
April 15 — Individuals *2017 Filing Deadline: 04-17, 2018*
File a 2017 income tax return (Form 1040, 1040A, or 1040EZ) and pay any tax due. If you want an automatic 6 month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. For more information, see Form 4868. Then, file Form 1040, 1040A, or 1040EZ by 10-15.
April 15 — Corporations *2017 Filing Deadline: 04-17, 2018*
File a 2017 calendar year income tax return (Form 1120) and pay any tax due. Details
April 15 — Individuals
If you are not paying your 2018 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2018 estimated tax. Use Form 1040ES.
April 15 — Household Employers
If you paid cash wages of $2,000 or more in 2017 to a household employee, you must file Schedule H Details
April 15 — Corporations
Deposit the first installment of estimated income tax for 2017 Details
April 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in March.
April 15 — Household employers
If you paid cash wages of $$2,000 or more in 2017 to a household employee, you must file Schedule H (Form 1040). If you are required to file a federal income tax return (Form 1040), file Schedule H (Form 1040) with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2016 or 2017 to household employees. Also, report any income tax you withheld for your household employees.
April 30 — Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until 05-10 to file the return.
April 30 — Federal unemployment tax.
Deposit the tax owed through 03-if more than $500.