Deductions for charitable donations can offer substantial tax savings, thereby making a large and profitable difference in your refund. All types of donations are eligible as tax deductions to help lower your tax bill.
There are some restrictions, though. One is that the donations must be made to a nonprofit that can prove 501(c)(3) tax status. Most legitimate charities state clearly on their websites or in their literature that they're 501(c)(3) nonprofits, so it's usually simple to verify.
Another requirement is that you must keep a receipt. Again, legitimate nonprofits have systems in place to ensure that they'll give you receipts for any and all donations. Yet another restriction is that not all expenditures that go toward nonprofits are deductible. In addition, there may be a ceiling as to how much of your donations you may deduct — it might be best to see a professional accountant to be sure you don't exceed the maximum.
Below are some common expenses that are deductible:
- Property: You can deduct donated real estate, furniture, clothing, automobiles, electronic equipment and office supplies.
- Mileage: If you use your car to assist a nonprofit, you may deduct the portion of mileage that was used.
- Cash: Cash donations are deductible.
- Tithes: You may deduct tithes to churches and certain other types of religious organizations.