Feb 15, 2010

Ways to Make & Save Money #7: Tax-Deductible Donations

You can read the rest of the Ways to Make & Save Money series here.

It can be a time-consuming process, but itemizing your tax deductions can save hundreds, and maybe even thousands, of dollars on your tax bill. One thing that can be itemized on your taxes is tax-deductible donations – and that's especially easy when it comes to donating things like clothes, toys and other items that we simply don't use anymore.

As I started thinking about ways to achieve my financial goal this year, I immediately thought of clearing out clutter and cleaning my house. That made me realize that I feel richer when my house is clean and organized. So one huge benefit of my goal is going to be a house that makes me feel wealthy – that's a worthwhile benefit even if I don't reach my end goal!

The two most important things when it comes to saving money with your non-cash charitable donations is to have a place to stash your donations, and to itemize them before you donate them. I've designated one corner for donations, so anything that's getting donated gets placed there. When I have the time and am ready to make a run to Goodwill or Salvation Army, I itemize the various items for my tax records. I've previously discussed how I keep track of non-cash charitable donations:

Works for Me: How I keep track of charitable donations
Calculating my non-cash charitable contributions

I've tried DeductionTraq and Turbo Tax's free service It's Deductible Online, which were recommended by readers as an easier way of tracking donations. I didn't love either, but I'm going to give It's Deductible another try this year – maybe I've evolved enough that I'll be more comfortable with it.

I expect to save a couple of hundred dollars in taxes thanks to our non-cash donations to charity, and I hope our donations find their way to people who really need them!


Austin said...

If I've donated less than $200, is there really any reason to worry about deducting the taxes?

Austin @ Foreigner's Finances

Chief Family Officer said...

It's not how much you've donated but whether you're itemizing. You're more likely to itemize if you have a mortgage (you're itemizing if you have to fill out schedule A). If you are itemizing, then you may as well deduct your donations. But your donations won't matter if you're taking the standard deduction.