New numbers out recently by Giving USA show Americans donated $410 billion to charities last year.
That's a record high.
Everyone has different reasons for giving, but whatever they are, you may as well get the most out of your donations when filing your taxes.
Financial adviser Michael Mason of Mason and Associates sat down with News 3 to explain how you can get the most bang for your buck.
If you are donating cash, are there other ways of donating that can stretch your dollar?
Yes. One popular method of donating to charities after you reach 70 1/2 years old is using Qualified Charitable Distributions. Qualified Charitable Distributions (QCD) allow you to take distributions from your IRA and directly donate it to charity.
According to Mason, in some cases you can increase your deduction by 185 percent with QCD. "So if you gave $10,000, you'd write off $18,500, and really that comes from not having $10,000 flow through the tax return which means you don't have to write that off, and it eliminates $8,500 of social security that may have been taxed. So there's absolutely no doubt, the best way to give [over 70 1/2] is through Qualified Charitable Distributions," Mason said.
Can you receive tax-deductions for donating items or time?
Although you cannot claim a tax deduction for the value of time or services you provide to a charity on your income taxes, you can receive tax deductions for the fair market value of items that you donate.
If you donate any item, be sure to get a record of the donation with the charity and assess the fair market value of the donation of the item so you can deduct this value later.
You can also write off your mileage if you're driving somewhere for charity, but the time you spend volunteering cannot be written off.
What types of charities can you donate to that are approved by the IRS?
The IRS allows individuals to contribute to certain charities and deduct these donations from their taxes. A number of organizations, such as 501(c).(3) and certain 501(c).(4) charities are able to receive tax deductible donations.
In general, the IRS does not approve any donations for tax-deduction if they are given to political organizations or employee associations.
The IRS maintains a comprehensive list online of charities that qualify for tax-deductible donations.
