If you constantly make charitable donations of both money and goods, then you ought to remember that they can be deducted on your income taxes. This, in turns, lowers your taxable income. But a donation tax deductible generally can’t exceed 60% of your adjusted gross income (AG).
To claim the deductions, you must itemize deductions on your taxes rather than claim the standard deduction. Having said that, today we take you through some of the most remarkable ways to maximize your tax deduction.
Plan Your Giving
You can never run out of options when searching for the ideal tax-planning opportunities with charitable donations to give you the largest deduction possible. In the event that you already know you’ll be in a higher tax bracket next year than you were this year, it would be ideal to wait and take the deduction next year, when it will be greater.
Donate Household Goods
Another remarkable way to maximize your donation tax deductible is to donate household goods. Not only is this the ideal way to save money on taxes, but also allows you to clean out your basement. There are numerous charities and church organizations that accept donations of clothing and household items to give away or resell to those in need.
Track Your Carry forwards Carefully
If you’re struggling to deduct all of your charitable donations in a year because you have hit the maximum percentage of taxable income, there is nothing wrong with carrying them forward for up to five years, after which time they expire and you can no longer use them.
What we are trying to imply is that you should make it the norm to track your tax carryforwards carefully, so that you use them up before expiration. In the event that you risk losing a balance carryforward, be sure to hold back on the current year’s donations and use up the older ones first.
Final Thoughts
Donating to charity is one of the best things you can do when you want to showcase your spirit and save money on your taxes at the same time. Actually, it is a win-win situation. But you must ensure you follow the rules set down by the IRS and keep careful records to both substantiate your donations and closely track how much you have given, so you don’t inadvertently miss taking a donation tax deductible.
