Everyone wants to lower the amount of taxes they are required to pay in a year and get that maximum refund in the spring. With filing season upon us, you may be thinking of ways to get the most bang for your buck this year – while avoiding the dreaded IRS audit.
Charitable giving is a great way to save money on taxes. In addition to doing something great for the needy in your community, you get to feel even better about your contribution when tax time rolls around. And you don’t need to give so much that you put yourself in debt. Focusing on how you give to charity can save you big.
Like anything you claim on your taxes, charitable donations must be well-documented. Many charitable organizations will provide you with a receipt at the end of the business year. Hold on to it. To be safe, it is also wise to pay by check and make a note in the memo line, as check stubs qualify as written documentation.
If you are able it is wise to save up your charitable giving and make several years’ worth of donations at once. This maximizes your deduction and may pay off more than making several smaller donations over the course of many years.
If you are considering making a significant change to how you handle your taxes, there may be consequences that you cannot foresee. It is always wise to consult with someone who knows the law, such as a financial advisor or qualified tax attorney. He or she can advise you of relevant tax law and help you plot the best course of action.
Source: Law & Daily Life, “Best Ways to Use Charity to Lower Your Taxes,” Deanne Katz, Dec. 21, 2013