Monday 26th of June 2017 7:02:04 PM

  • Dear Santa, I want a deduction!

    Tuesday 27th of November 2012 1:17:20 PM

    With Christmas right around the corner many Americans are trying to save money where they can. Deals like the ones a shopper gets on Black Friday or its internet equivalent, Cyber Monday, just don’t cut it. Many people have turned to the idea of being able to receive a tax write off for Christmas gifts. The question here is “Can you write off Christmas gifts?”

    The answer is, maybe. It really depends on how you are gifting and to whom you are gifting. For a gift to be written off it is has to be gifted to a qualified charity. Unfortunately gifts purchased for your family members or friends can’t ever be deducted. Keep in mind that the write off must be itemized and the standard tax deduction will be forgone.

    The IRS will recognize establishments such as schools and hospitals as a qualifying charity. Other organizations that are operated for religious, educational or literary purposes do also qualify. If you are gifting to a political party or any individual then at this time you can’t write off the taxes. Before making any Christmas gift contribution to a charity please check that this organization is a qualified charity.

    When it comes time to do your taxes understand that the value of your gift (if it’s not a monetary contribution or brand new item) will be the current fair market value of the gift. If the item is not new you can ask the organization to whom which you are donating to estimate the value. In the event that the total value of your donation is more than $250, a written notice is needed to claim a deduction.

    In addition to your Christmas donations any other charitable contribution will be combined when filing your taxes. It is possible to deduct as much as fifty percent of your AGI (annual gross income) from your donations. In the event that your donations should exceed fifty percent of your AGI then you can carry the deduction forward over the next five years, reducing future taxes.

    Itemizing of your deductions is necessary to write off your Christmas gifts. By doing so you are adding the value of any charitable contributions to other itemized deductions, like mortgage interest or medical expenses. In doing so, you forgo the standard deduction which is normally $5800.00 for a single tax payer or $11,000.00 for married tax payers. Take note that you may benefit from taking the standard deduction if it is greater than itemizing. Make sure to keep track of this.

    Lastly, gifting is good….not always good for your wallet, but a great gesture none the less!

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