The Festival of Trees here in Salt Lake has come and gone. I was so happy to be a part of it. I teamed up with my best friend to decorate and donate a 4 foot tree to the Festival. Our theme was Handel’s Messiah, so there were music notes, french horns, bells, and doves.
Decorating Day was December 1st, and Cristina was out of town, so I had to decorate it myself. I was so worried how it would turn out, but it ended up looking very professional and classy. The pictures really don’t do it justice, unfortunately.
We spent nearly $160 on our little tree. Sure we went over budget, but I think we probably set it too low at $100 considering that decorations for Christmas trees are not cheap.
The night before I went to the Expo Center to decorate the tree, I went through all our receipts. I needed to calculate how much we spent, and turn in the list of expenses to the event coordinators so they could know where to start the bidding for our tree and comply with IRS requirements for charitable donations.
Honestly, I would have donated a tree even without the tax benefits, especially since I know what it’s like to have a child stay in the hospital (even if it was just a few days), and all the money generated from The Festival of Trees goes to Primary Children’s Hospital. Plus, I doubt we have enough expenses this year to itemize deductions on our taxes. We’ll probably just take the standard deduction.
© Carolyn Franks / Dollar Photo Club
Difference Between Itemized and Standard Deductions
When you do your taxes, you have two options to lower your taxable income: the standard deduction and itemizing deductions. The standard deduction is way less work on your part and still allows you to take a sizeable chunk off your income in order to lower how much money you are taxed on. Itemizing deductions is going to take some thought and work throughout the tax year in order to meet or exceed the normal standard deduction amount.
How Do You Itemize Charitable Donations?
If you donated to charity throughout the year, you can claim the amount you donated on your taxes if you itemize. But how do you figure out amounts? Is shipping and taxes included? What if you donated to the thrift store, and you don’t know the value of what you donated?
When you drop off a box of unwanted items that you gathered from your house at your local thrift store, you should make sure to get a receipt. You will definitely need this come tax time to figure out how much you donated. It’s also required to have a receipt whether you donated $15 worth of items or $1,500 worth of items.
It’s probably a better idea to write down all the items you donated and put a value to them before you take them to your thrift store. It’s vital that you are very conservative as you value items. The items should be in good condition if you are donating them and claiming them on your tax return. If you donate often, you can use a program called ItsDeductible.
If you donated less than $250 to charities throughout the year, you should be fine with just a receipt that has the date on it. For anything over $250, you can find more information found HERE.
How Do You Figure Shipping and Sales Tax?
This is where I got stuck while adding up the expenses for our tree. Should you add on shipping (I ordered some ornaments online) and sales tax? I wasn’t able to find any information on the IRS site about this or on any other site in my research. I figure that if they want you to value your donated items to a thrift store conservatively, you should probably value donated items to a charity (in this case, my tree) conservatively. Therefore, I just left off shipping and sales tax.
The total amount on the expenses sheet I filled out for the Festival of Trees came out to just over $120. That’s a far cry from the $160 that I told you it cost us for the tree and it’s decorations. I know that shipping and sales tax didn’t end up being $40. I think the difference came from the fact that I counted items like a hot glue gun and florist wire as part of the $160. Since those are items that we used to put the tree together, and not donations, you can’t count them towards your donation total when itemizing.
Do you have any valuable advice for itemizing charitable donations?
Disclaimer: I am NOT a professional tax accountant. Therefore, the information provided in this post is strictly informational. If you have further questions, you should probably look on the IRS website or ask a tax accountant.