The Salvation Army is one organization that often takes car donations. Is donating your vehicle right for you? Katherine Frey/The Washington Post/Getty Images To answer this question, we have to expand it to two questions. First, is it worth it to the person donating the car? And second, is it worth it to the charity receiving the car? It's easy to assume that donating a jalopy is easier than trying to sell it. And, the thinking goes, even though a donation won't result in a pocketful of cash right away, it'll pay off at tax time when the donation results in a bigger tax refund. Unfortunately, that's not necessarily true. The IRS is taking a harder look at vehicle donation deductions to make sure taxpayers' paperwork accurately reflects their donated vehicles' value. In the past, taxpayers who donated vehicles got to claim a deduction based on the car's fair market value, but these rules have become more complicated. While the IRS' rules about vehicle donations to charity are … [Read more...] about Is it worth it to donate your used car to charity?
How do charity tax deductions work
Most of us learned as children that sharing is a good thing. We didn't know we were practicing philanthropy -- we just knew that giving to other people or important causes made us feel good. Decades ago, many people tended to give to the organizations that touched their lives, such as churches, hospitals and schools. (Those three are still among the most popular recipients of charitable giving.) Today, there are more than 600,000 charities and foundations operating in the United States, representing, it seems, every conceivable cause on the planet. Charities are making their presence known through elaborate ad campaigns, Web sites and high-profile fundraisers. These more organized, more visible efforts are necessary, charities say, because: Their services are more in demand than ever.Government funding is declining and, in many cases, disappearing.The cost of everything continues to spiral upward. Americans have responded generously -- charitable giving in 2005 totaled over $260 … [Read more...] about How Philanthropy Works
Above-the-line vs. below-the-line ... not just a gut instinct. iStockphoto/ThinkStock It'd be nice if we could just label above- or below-the-line deductions based on gut feelings. Like, hey – good for you for donating to charity! Very above-the-line. You lost $2,000 in stock? Well, that's too bad, but it's not well-intentioned enough; below-the-line it is. In our pretend made-up tax world, "the line" is some sort of vaguely moral point that signals you're above-board. Unsurprisingly, the Internal Revenue Service's (IRS's) "line" is pretty black-and-white and doesn't have a lot of room for philosophical debate. Here's the deal: The real line is your adjusted gross income, or AGI. In general, deductions are adjustments to your income. So this is simple: Take a $400 deduction, and you can cut $400 from your AGI – and thus get taxed for $400 less. Easy! Not so fast, citizen taxpayer. That may be true for some deductions, but not all. That's where the above- and … [Read more...] about What is an above-the-line deduction?
Paying taxes is never fun, but how do you make sure you don't overpay? Nora Carol Photography/Getty Images Just a few days before Christmas 2017, the U.S. Congress, cheered on by President Donald Trump, passed the biggest tax overhaul in decades, packaging it as a gift to all Americans. Highlights of the tax bill — which took effect on Jan. 1, 2018 — include lower federal income tax rates for almost all households, a near doubling the standard deduction to $12,000 for singles and $24,000 for married couples filing jointly, and a doubling of the child tax credit to $2,000 per kid. To comply with budget rules, all of those tax reductions for individual taxpayers will "sunset" or revert to 2017 levels in 2025. That's not the case for big cuts to corporate income taxes and estate taxes, which are permanent. That said, very few things in today's volatile political climate are permanent. It's possible that American voters will elect a very different Congress and president in … [Read more...] about What You Can Do Now to Get the Most from the New Tax Law
If you itemize your deductions, you can include qualifying charitable donations, including nonmonetary donations. LuminaStock/iStockphoto/ThinkStock Charitable tax deductions are the IRS's way of rewarding you for making donations to organizations that help people in need. For every contribution you make (cash or otherwise) to a qualified charity, you can shave a little (or a lot) off your adjusted gross income and reduce your own tax burden. Charitable contributions can take many forms. Cash, check and credit card donations are the most straightforward type of donation -- they're easy write-offs. But you can also donate property, goods, real estate, your time and services, stock options, intellectual property and just about anything else you can think of. This is where things take a turn into more complicated territory. Some of it will be fully deductible, some partially, some not deductible at all. The answers are all to be found in the IRS publications on charitable … [Read more...] about How Charitable Tax Deductions Work