With this year’s tax filing deadline quickly approaching, individuals are searching for viable write-offs to increase the amounts of their refunds or, at the very least, to prevent themselves from paying too much. One of the most-used tax write-offs is the charitable donation. Giving to charity has long been used by everyone from the extremely wealthy to the middle class to gain an advantage come tax time. While you cannot donate now and have it count toward last year’s income tax return, here are some things to consider for 2016.
Keep Your Receipts
No matter what you donate, be sure to get a receipt. The receipt must include the date of the donation. Income tax returns are filed by the calendar year. Your receipt must be dated for the tax year you are claiming, or the donation will not count. You can donate tangible items or give with a payment made by a credit card or check, but you must have a receipt to show the donation was made during the tax year.
Credit Card Donations
If you make a donation by credit card, it is deductible for the tax year in which the donation was made. It does not matter if you do not make your credit card payment until the following year. For donations made by check, as long as the check is mailed by December 31, the contribution is deductible for that tax year.
Are You Planning to Move?
If you are moving this year, you can lighten the load and get a tax deduction all at once. Instead of taking that extra car, boat, or RV with you, donate it to a charitable organization. The amount of your write-off will be based on the fair market value at the time the charity sells the item. This amount is not the same as what you would ask when selling the vehicle on your own. This applies to all deductions over $500.
There are certain types of interest payments that can be written off. Interest on a home loan counts as a write-off. That includes mortgages and home equity lines of credit. Any interest paid on outstanding student loans is also deductible. What is not included is any interest paid on credit cards, auto loans, car title loans, or payday loans. Embassy Loans, a Florida-based car title loan company, suggests you consult a tax professional for help in determining which interest payments are tax deductible.