If you’ve decided that this is your year of organizing, we’re here to help you make the most of it.
How spring cleaning can cut your tax bill
Ah, spring. Its arrival brings the promise of new beginnings, refreshingly pleasant weather, and the sniffles of seasonal allergies… Wait. Scratch that last one. Let’s replace it with “surprisingly legal ways to lower your taxable income so you pay less to the IRS.” Sound good? Yeah, we thought so, too.
If you’ve never raided your own closet like a fashion-hungry friend from high school on date night, now’s the time to do it. Take a look at all that you own with a fresh set of eyes, and don’t be afraid to pull everything out. Yes, even the old boxes way in the back or on the top shelf. Make a gigantic pile of every last article, and suppress that urge to reminisce — there will be time for that later. Everything gets its chance to make the cut in due time.
Once you’ve amassed your pile of possessions, take a moment with each item — whether it’s a belt you haven’t seen in years or the comfy college t-shirt you can’t do without on Netflix nights — and ask yourself if it’s really contributing to your overall happiness. Could it be adored by someone else? Could it help someone in need right now? And could it add to your list of tax deductions?
If so, grab a box and get to packing. The wedding dress or tux you’ll never wear again can make a monumental difference in another’s hands. If you discover that 18 pairs of shoes really is too many, keep your favorites and shed the excess — just keep track of the approximate value of each item in case the charitable organization you choose offers itemized receipts.
How to make sure you’re getting the most from your donations
The most important first step here is to ensure that you’re donating to a tax-exempt organization as defined by the Internal Revenue Code, section 501(c)(3). Though the considerate act of charity is often reward enough, this is the only way you’ll benefit from donations to nonprofits come tax time.
Some of the most common players include qualified religious institutions, the Salvation Army, Habitat for Humanity, Red Cross, United Way, Goodwill, and organizations that volunteer their efforts to maintain public and state parks. If you’re curious as to whether or not the organization of your choice is a viable option, you can search with the IRS Exempt Organizations tool to be sure. Collect and save every donation receipt for fast and easy reporting on your next return.
Operation “Spring Clean and Save” begins now
Even if you aren’t itemizing this year or next due to current tax law, it’s important to remember that these things do change — and it’s always nice to be aware of the ways you might benefit from completing your return differently in the future. In any case, TaxAct is here to help you file with the knowledge that you’ll never miss out on a single deduction, especially the ones that sound too good to be true (but are surprisingly legal nonetheless).
Source : TaxAct Blog