5 million people helped and counting  >  Call 1-888-888-CARE or Get Started Now
Article library
"We consider the CareOne coaches as our partners helping us with our situation."Brandon A., Omaha, NECareOne Customer

End of the Year Tax Breaks*

Here's the definition of altruism:
Altruism: selfless concern for others.

Here's our version:
Altruism: selfless concern for others, especially when it also helps your tax returns.

Seriously, why not help yourself while helping others? It's a win-win: you feel good, they feel good, and your tax breaks feel good. Here are a few ideas for how to embrace our amended definition of altruism and stay in control of your taxes.

First, start by determining if you're going to itemize your deductions. This will depend on your tax situation. If it's fairly simple (you don't own a home or have complicated medical bills), you can opt for standard deductions. But if you're a good record keeper, have a mortgage, miscellaneous expenses over 2% of your adjusted gross income, or various other exemptions, you may want to itemize-which means you need to stay on the look-out for tax deductions.

Which brings us to donations. Donating clothes, household goods, and books is a great way to make a difference in the lives of others-and the tax deductions don't hurt either! Plus, it'll help clear some space in your closets and attic.

When you're giving to charities, make sure things are clean and organized. Some of this is just common decency (just because someone is down on their luck doesn't mean they'll wear dirty clothes). Some of it is for tax purposes. The IRS requires that all donations be in good used condition or better.

Put things in boxes or bags (rules on receptacle vary by charity, so check their website ahead of time). Organize by type of item: i.e., clothing, books, kitchen, CDs, etc. Make a note of what you're donating and what the fair market value is. Fair market value is defined as "the price at which property would change hands between a willing buyer and a willing seller...both having reasonable knowledge of all the relevant facts." Here's a detailed valuation guide to help you determine the fair market value of your items.

Make sure your donations are going to a qualified organization with a tax-exempt status. You can find out by asking the charity, reading their literature, or checking IRS Publication 78, Cumulative List of Organizations, which lists most qualified organizations.

Now that you've made your donation and received your receipt, toss it in a receipt box. Do this throughout the year as a way to keep tax-related things in one place. You can also include any records of monetary donations you've made to charities or causes. Consider organizing that box at the end of the year instead of waiting until April 14th. That gives you plenty of time to remember other donations you've made that didn't make it into the box.

Other expenses to track and put in your tax box include medical expenses if they exceed 7.5% of your adjusted gross income. Keep in mind that these expenses only count if they're restoring your health-an eyelift won't cut it!

Mortgage interest can also be deducted. This includes any interest you pay on a loan secured by a main or second home including a mortgage, a second mortgage, a line of credit, and a home equity loan.

If you have student loans, they can be deducted if you meet certain criteria, so do your homework!

Another idea is your 401(k). One of the benefits of these plans is that your contributions are done on a pretax basis.

You'll run into some legalese as you investigate these types of categories, but it's worth the time to decipher. Maximizing your deductions will maximize your return!

Other Ways to Save

Fashion forward

Selling clothes to thrift stores isn't quite as altruistic as donating to charity, but consider it a contribution to your own wallet!

To make the most of thrift stores, start with a little research. Call and ask what they're accepting-many stores have policies about what they're looking for at what time (for example: no wool jackets in summer, or they're particularly interested in designer denim).

Some stores are pretty picky, especially if they have loads of people bringing in items to sell. You'll have a better chance of unloading your stuff if it's in near-perfect shape. Make sure everything is clean and ironed, and mend holes, missing buttons and ripped seams.

Swapping soiree

Help your friends, the landfills and your own closet with a clothing swap. It's a fun and festive way to recycle while refreshing your look.

Start with an invitation list. You want enough people to provide a variety of outfits, but not so many that chaos ensues. About 15 people is probably ideal (depending on your space limitations of course). Plan to have a couple of full-length mirrors available Designate a room for changing (preferably not the bathroom, which will be used for other things!).

Depending on your group, you can organize the actual swapping process in different ways. In some cases, a free-for-all works fine: someone sees something they like, it fits, they take it. In other cases, you may want a more formal process. Consider issuing a ticket (cut some colored paper into squares) for each item a guest brings. The idea is to have your guests swap a ticket for a piece of clothing. You can organize it almost like an auction: have a guest present an item they brought and whoever holds up their ticket first gets the piece of clothing.

Offer to donate any leftovers to a local charity (don't forget to ask for a receipt for your taxes-see above!).

A financial page-turner

Book swaps are especially popular in the summertime, as people start looking for lazy summer reads. The clothes swap principles above work well here too. Just be sure to provide a table to display the books so people can browse. Another fun idea is to give out bookmarks as party favors (you can buy these cheap at dollar stores or make your own out of poster board).

Ask your friends to "present" the book-no need for a formal book report, just a couple words on subject matter, tone, whether they liked or disliked it. These informal little speeches will help your guests figure out which books they'd like to keep their eye on.

Again, donate any leftovers to charity.

Donating to charities can make a big difference in someone's life-and if you just happen to do it at the end of the year, well, there's nothing wrong with giving a helping hand to your own funds!

*This is not intended to be, and is not tax advice. It is always wise to check with a tax professional if you have any questions before filing your taxes.

If you liked this you may also like:

  • What if You Owe Back Taxes?*

    If you can't pay your federal tax liabilities promptly, here are some suggestions on how to partner with the IRS and eventually pay off your debt.

  • Tax Audits*

    Getting an audit notice from the IRS can be intimidating. Understanding the process can help you get through it, and may even help you avoid an audit altogether.

  • Rapid Tax Refunds*

    Fees can quickly reduce your refund total for the sake of a fast-cash solution. Know the facts and consider other alternatives.

  • Income Tax Withholding*

    Each time you start a new job, one of the first things you do is complete a Form W-4. Do you know why?

  • 10 Revamped Tax Write Offs*

    In these uncertain economic times, saving is more important than ever. But all too often, people who are trying to cut expenses end up overpaying on their taxes. In fact, as many as 2 million Americans shell out more money to Uncle Sam than they really owe every year.

Begin our online process to see your personalized savings.

Start Now

Back Print

Quizzes and Polls

What's your debt IQ? Take one of our quizzes and find out how much you know about financial fitness.

Take the Quiz Now!

Stay On Track

Subscribe to our newsletter, packed with great articles, tips, and advice to help you make the most of your money.

Subscribe Now!

Crunch the Numbers

Our calculators can help you figure out your budget, credit card payments, mortgage, and more!

Learn More
 
Debt Help - CareOne Debt Relief Services
Offering CareOne Debt Relief Services: