Thanks to some sloppy bookkeeping on my end, our family ended up owing $2500 in Federal taxes this year. One reason that our taxes were so high is because we dropped our cash contributions to local charities this year in hopes of reducing our family debt. As an alternative, we volunteered our time which unfortunately is not tax deductible.
Not all charitable contributions have to be in cash to claim a deduction. Used items such as clothes, furniture, and toys that are donated to a non-profit are also tax deductible. To claim these items, you will need both a receipt from the charity and a description of what was donated along with what the IRS considers to be fair market value. (The Salvation Army has a great Donation Value Guide you can refer to.)
One of my mistakes was undervaluing the non-cash items that we donated last year. I also didn't bother tracking small donations such as bags of paperbacks, boxes of games, that sort of thing. Even at $5-10 a bag, these can add up to a significant donation over the course of a year.
Here are three other charitable deductions I also forgot to track.
Charitable miles. I might not have donated cash to favorite charities but our family did a lot of driving during city clean-up days, volunteering at food banks, and other charitable causes. We easily drove over 1500 miles in charitable service this year. Had I tracked that mileage, we could have claimed a 14¢ a mile deduction or $210.
Food. We grew food for the food bank last year, contributed homemade breads and goodies to church suppers and soup kitchens, and bought bargain-priced canned goods for food drives. These too would also have been deductible had I kept track of my spending. Deductible expenses when growing produce for charity include the cost of seeds, water, fertilizer, and supplies. As far as food drives or baked goods, keeping a grocery tape with the actual cost of the ingredients or food items would have let me deduct these items. I missed out on at least $600 in charitable deductions (and probably more) because I didn't track these costs.
Office supplies. Do you serve as treasurer for a non profit? Write a club newsletter? Mail off 'thank-yous' on behalf of your child's classroom or solicit charitable donations by mail? I do and like a dummy, never think about the cost of paper, ink, postage, and long distance as being deductible expenses. The best way to track these expenses is with a small pocket journal and estimating usage (such as 1/3 of a ream of paper or 3 stamps) when receipts aren't available.
I might not have donated cash to my favorite charities in 2012 but I did donate things like mileage, food, and supplies which all could have been deducted had I taken the time to track them. Considering the amount of my tax liability for the year, this is one mistake I won't make again.
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More by this contributor:
- Volunteering & Philanthropy