Shared Joy, Hearty Donations, and Smart Savings
Updated: Dec 28, 2020
A super list of everything you can achieve and deduct this holiday season
Whoever we are, irrespective of age, socio-economic background, or geographic location, helping others undeniably makes us feel better. There is no false trigger. It works like a clock for as long as humans existed.
We want to help. We love doing it. It makes us happy.
Giving to others might not be your immediate choice of a cure for 2020 blues. Yet it is a worthy affair not just for your emotional wellbeing, but potentially for your wallet as well. I know we should not expect anything in return when we do someone a kindness. For those of you who might get offended by my rather businesslike approach to philanthropy, please bear with me. Our dwellings are packed, hearts call for altruistic gestures, and 2020 tax returns need deductions. So here is my proposal -
Let’s share what we can with the world, smile, and save a few bucks to celebrate an extra refund in April or perhaps make that missing bit of cash you needed to see Yellowstone in person.
Art and Sports Aficionados
If you need a holiday gift idea, consider supporting local museums, theaters, and athletic clubs. Purchase of membership in a qualified organization is a tax deduction whether you buy it for your friends, relatives, or to cheer your kind self. Donations of this sort are a lifeline for fine and performing arts. Sports are in dire need this year as well. It will truly make a difference for your city, local community, and is unquestionably good for humanity.
Please maintain a record of the amount contributed — a bank/credit card statement will suffice. You can search for eligible organizations on the IRS website. It might be quicker (and easier) to check websites directly or call to verify. You can also simply google “qualified charitable organization near me.” Warning: your mom is adding this to her Christmas letter, no way around it. You might also brag a little on your next date. It just tends to sip out of people (happiness is contagious). And hey, we are all very proud of you, seriously, no need to be shy.
Takeaway: memberships and additional donations of funds to qualified organizations in the U.S., Canada, and Mexico are deductible by whoever purchased it (donor). Keep “thank you” emails/letters from donee organizations acknowledging your gifts or credit card bills.
With the holiday season coming up, many of us will search thru the clutter accumulated in the long months of quarantine and the dark corners of impulse purchases. Clothing, shoes, accessories, toys, household items, books, that self-care set you got last Christmas, and whatever else you hastily acquired — donate! Everything has a fair market value. As you likely already guessed, it is deductible.
Wondering if you should make an effort? Besides thinking of karma and good vibes, you can take a quick look at Goodwill Value Guide. It lists commonly donated items and corresponding values along with a neat calculator that translates the original price into a donation. If you fancy to give away that old couch or some other hefty piece of property, Salvation Army Hot Line will share a quick tax estimate with you and arrange for pick up. Yes, you can be goody two shoes and save on taxes without leaving your house.
Takeaway: Almost any item in good condition can be donated and is deductible. Take thorough records! If your non-cash donations will exceed $500 in value, detailed itemization is required by IRS (Form 8283).
Animal Rescue Workers
The world is on lockdown. Again. The spirit of this holiday season might be somewhat dark for many. Sadness and loneliness are not strictly human prerogatives. If you love animals and able to care for one (or more), I challenge you to complete a foster volunteer course at a local shelter or adoption agency. If you cannot be with your human loved ones this Christmas, consider rehabilitating a pup in need or showing a feline loner that life can be warm, beautiful, and full of things to scratch. If you are already a volunteer or employee of a rescue center, I and the rest of this planet salute you! Your hearts are larger than life, and I bet you smile often. Here are the details of what your sainthood renderers in tax deductions:
Medical bills. If you are covering veterinary fees, medications, or have to modify your home to offer special accommodations, deduct! Anything over $250 needs validation from the charity you affiliate with (email will suffice).
Pet supplies, including food. It could be leashes, feeding bowls, toys, blankets, grooming supplies, treats, etc. If you have your own pets, deduct only a portion of expenses that relate to the foster animal(s). Typically, a percentage based on the number of animals in the household is applied to all related purchases.
Example 1: if you have a kitty and foster another two, then 2/3s of all your feline related expenses are deductible.
Travel expenses are subject to the general rules for unreimbursed volunteer expenses discussed below.
Takeaway: Look thru your monthly expenses for pet related food, supplies, medical bills and other items that you might have missed in the past.
Volunteers of Anything and Everything
The world needs us, the causes are infinite, and you probably already know what moves You. Join the ranks of like-minded souls to meet people who care about what is important to you. It is a great feeling to belong and to share a mission. We are not talking about Star Track adventure here, but it is pretty close, and it is fun. Don’t overstretch. Some projects are more demanding than others. It is easy to get overwhelmed. Naturally, please remember to note your expenses.
Unreimbursed car fuel costs, parking fees, and tolls. You can track these purchases via credit card bills. Gas expenses have another option — mileage. Most likely, you travel to a limited number of locations — Google Maps will do the trick on mileage count. Use the standard rate of 0.14 cents a mile (2020, IRC 170(I)) to figure your contribution. Keep a mileage log via an app., excel, or fancy notebook. Repairs, registration fees, and car insurance are not deductible. But if you are driving a great deal while volunteering, the gas costs do add up, don’t pass on it.
If you are purchasing supplies required for activities set out by the organization, it is a deduction as well. Again, for any items that exceed $250, you need acknowledgment from the organization you are affiliated with.
Example 2: you and like-minded angels volunteer for a local charity, driving to the various locations weekly to distribute PPE supplies to low-income families, which you buy out-of-pocket per agreement with the said charity. The cost of gas (or mileage), parking fees, and cost of PPE are deductible unless you stashed a few masks for your personal use. In this case, please keep your halo gleaming and reduce deduction accordingly.
Internet and Cell-Phone bills. If you consistently volunteer from home and your time contributions are significant, you may be able to deduct a portion of the internet and cell-phone bills. A few hours here and there will not qualify. IRS does not define a specific time or period of engagement that is required. Your time contribution must be ample and consistent.
Example 3: you support local refugee resettling initiative; your main duties are remote and performed from home — via phone or online. You consistently volunteer roughly 15 hours each week for a period of 6 months. The portion of cell-phone and internet bills for these 6 months can be allocated to the charitable deduction.
Naturally, if your charitable work takes you to the air, the unreimbursed costs of taxi, airfare, lodging, and some meals are deductible as well.
Your time is priceless and cannot be deducted, c’est la vie. But remember, you are a superstar, and the world is certainly a better place because you are part of it!
Takeaway: deduct unreimbursed expenses related to the charitable activity; obtain written confirmation from the charity for all items that cost more than $250. Generally, it is recommended to submit a comprehensive statement of all expenses incurred and get an affiliated charity to acknowledge your contribution.
NPR called it “nearly 1 in 5 adults are diagnosed with mental disorder”. Anyone who encountered a psychological issue knows that the remedies are as complex as the human psyche itself. Therapy is not for everyone; it might be difficult to afford these days, and often, we just don’t feel like baring our souls to licensed strangers. What we also know is that our “feel-good’ barometer can be depended on to go off the scale if we help a stranger.
Perhaps, a little girl, someone dreaming of a pair of shoes that have been sitting in your storage for ages. There is also a battalion of boys who would cheer to your old PlayStation. Perhaps, what we need this holiday season is to lift someone’s mood and heal our own troubles by Doing. A generous donation season can declutter our homes, offer a chance to make a change, meet new people, and an extra budget for giving next year.
Let's spread some joy, be merry, and be healthy. Happy holiday giving to all!
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate for or applicable to specific circumstances. Consult a Certified Public Accountant before making any major financial decisions.