The last four months of the year are known as the ‘Giving Season’ because there are several holidays in the last few months of the year. Holidays encourage people to donate more generously than they would otherwise.
As we head into the Giving Season, you may be wondering if your charitable donations are tax deductible. At Unity Parenting and Counseling, we want to make sure that our donors understand all of the benefits of their charitable donations. We’ll explain what tax deductions are, which expenses are tax deductible, and tips for deducting charitable donations from your taxes this year.
What Does Tax Deductible Mean?
According to the experts at Investopedia, a tax deduction is “a deduction that lowers a person’s or an organization’s tax liability by lowering their taxable income.” Typically, these deductions are expenses that taxpayers pay during the year. They can be applied against or subtracted from the taxpayer’s gross income to determine how much tax is owed.
Tax deductions benefit taxpayers because they reduce the amount of your income that is subject to tax.
What Expenses Are Tax Deductible?
Taxpayers should take advantage of numerous contributions and deductions on their taxes each year. These deductions can help you pay a lower amount of taxes or receive a refund from the IRS.
When it comes to claiming deductions on your tax return, you will most likely benefit from itemized deductions. Itemized deductions are expenses that you can subtract from your adjusted gross income. Itemized deductions tend to encourage specific behaviors or help with certain expenses.
Here are 12 common deductions that you can write off on your tax return this year.
1. Charitable Donations
Good news! Your charitable donations, including donations made to Unity Parenting and Counseling, are tax deductible. You can deduct charitable contributions made in cash for up to 60% of your adjusted gross income. You can also complete itemized deductions for donated items and property.
2. Interest on a Mortgage
If you have a mortgage, you can deduct the interest you pay. However, there are some limitations. The interest must be on a maximum of $750,000 of mortgage debt. Additionally, the debt must be incurred after December 15, 2017.
3. Taxes Paid to the State
You can deduct all state and local income taxes that you have paid as long as they do not exceed $10,000.
4. Real Estate Expenses
Mortgage insurance premiums, mortgage interest, and real estate taxes are all tax deductible.
5. Property Taxes
Under the Tax Cuts and Jobs Act, all state and local income taxes, including property taxes, are limited to $10,000 in deductions.
6. Medical Expenses
If you drive to doctor’s appointments or hospital appointments, you can deduct $0.17 per mile for medical purposes. If you file Form 1040, you can deduct medical and dental expenses that are more than 7.5% of your adjusted gross income.
7. Lifetime Learning Credit Education Credits
The Lifetime Learning Credit allows people to take credits for taking classes at a community college, university, or other higher education institutions. You can deduct a maximum amount of expenses up to $10,000 for as many years as you like. However, the maximum you can receive as credit is $2,000 per tax return.
8. American Opportunity Tax Education Credit
The American Opportunity Tax Credit gives credits for the first four years of higher education. The maximum annual credit is $2,500 for each eligible student.
9. Retirement Credits
If you contribute to a retirement account such as a 401(k) plan or Roth IRA, you can get a tax credit of 50%, 20%, or 10% depending on your adjusted gross income.
10. Contributions to Your IRA
You can claim contributions to your traditional Individual Retirement Account as tax deductions. For both a traditional IRA and a Roth IRA, the maximum contribution is $6,000. If you are 50 years old or more, you can contribute an additional $1,000.
11. Self-Employed Healthcare Premiums
If you are self-employed, 100% of the health insurance premiums that you pay monthly for yourself, your spouse, and your dependents are tax deductible. This is true whether you itemize your deductions or not.
12. Interest on Student Loans
You can deduct a $2,500 maximum student loan interest on your taxes. Be aware, however, that there are some instances where student loan interest is not able to be deducted from your taxes. You cannot deduct student loan interest if you are single and your adjusted gross income is over $80,000. Additionally, you cannot deduct student loan interest if you are married and filing jointly and your adjusted gross income is over $165,000.
Tips For Deducting Charitable Donations From Your Taxes
Here are some important things to keep in mind when deducting charitable contributions from your taxes this year.
- Keep a record of your contributions and expenses in a spreadsheet. This will make it quicker and easier to file your taxes.
- When it comes to itemized deductions, mortgage interest, charitable deductions, and state and local income taxes will most likely result in the largest deduction.
- Don’t forget to take into consideration all of your possible deductions.
Remember, all donations to Unity Parenting and Counseling are tax deductible, so keep a record of your donations to make tax time easier.
How Your Charitable Donation Helps Unity Parenting and Counseling
Unity Parenting and Counseling accepts donations of money, in-kind services, and goods. Your contributions are tax deductible.
Your charitable donation helps Unity Parenting and Counseling offer a variety of programs and services to homeless youth in the Chicagoland area.
Here are just a few of the ways in which your monetary donation can support homeless youth involved in our programs:
- Buy groceries for a family in need
- Buy bookbags and school supplies for children
- Provide transportation fares to allow homeless youth to attend a job or a job interview
- Purchase clothing for a job interview
- Pay for daycare services so a young parent can go to work
- Buy a week’s worth of diapers for four families
- Buy beds and bedding for Unity’s Ujima Village Homeless Youth Shelter
- Pay to send homeless youth on educational field trips
- Pay consulting fees for a Crisis Therapist
- Pay for the security deposit for youth-headed families moving into independent housing.
Donate to Unity Parenting and Counseling
During this Giving Season, consider donating to Unity Parenting and Counseling. Our programs and services would not be possible without your generous donations and support. You can donate to Unity Parenting and Counseling via PayPal or a check. Your contributions are highly valued and always welcomed.