Tax season is over (or nearly over for some) but it’s never too early to start preparing for the next season. If you’re looking for ways to boost your refund, you may want to add volunteering in your community and charitable donations to your list of “things to do” this fiscal year.
Here are some tips to get the most from volunteering and donating:
Take Advantage of Volunteering Opportunities
Not only can some volunteering opportunities be tax deductible, but volunteering is beneficial to you, as a person. It reduces stress, improves your social skills, and helps you strengthen your relationship with others in your community.
While you should avoid volunteering solely for the tax write off, it’s important to know that there are some opportunities that are deductible and some that are not. Here are a few rules to consider:
The “Value” of Your Time is Not Deductible
Do you mentor students or spend a few hours a week cooking at your local food kitchen? While the time you commit is “priceless,” it has no value when it comes to tax time.
Keep Track of Expenses
When you start to volunteer, keep track of certain expenses. For instance, some of your travel expenses, during your volunteer hours, may be deductible. Keep track of bus or taxi fare or if you use your own vehicle, track gas, oil, parking expenses, and tolls.
You can’t, however, deduct insurance, maintenance and other costs associated with your vehicle.
Other Possible Deductions
Your allowed deductions may vary from one volunteering opportunity to the next, but there are other things you can often deduct at the end of the year. If you host a party or a fundraising event for the organization, you can deduct some of the costs.
If you are required to purchase (and wear) a uniform, it can be deducted, as can the cost of cleaning the uniform. You may also be able to deduct supplies you purchased to be used while volunteering.
A Few Tips on Charitable Donations
Cleaning out your closets or garage? If you’re working on minimizing your living space, some of your gently used or practically new items may be deducted. Before trying to claim your donation as a deduction, you need to make sure that you’re donating to a qualified organization.
When determining the value of the items you’re donating, you need to think about fair market value. Fair market value is the price at which property would change hands between a buyer and seller.
Even if you are donating a barely worn wardrobe, worth over $300, you need to determine the price by making comparisons to similar items in consignment or thrift stores. Granted, the amount you deduct may be just a fraction of the original cost, it’s better than deducting nothing.
If you donate money, whether in person, through email, or even through text, you must keep track and provide adequate proof of the monetary donation. Your word, that you donated $150 to an organization, is simply not good enough.