Give a little bit — especially if you can get some back on your taxes as a result! Here are a few ways to make sure your good deeds are rewarded.
Get Back for Giving
While it’s easy to include any cash contributions or other donations when tallying charitable contributions, people often forget the little out-of-pocket expenses.
• Any costs incurred that helped you do your good works are deductible. If you donated a meal to a soup kitchen, the cost of the food you used to make the dish should be part of your charitable contribution.
• If you used your car in connection with a charitable event, deduct 14 cents per mile plus parking fees or tolls . If you were doing Hurricane Katrina relief work, then deduct 32 cents a mile.
• It used to be much easier to donate the “junk” in your home to charity, and get a charitable deduction for it. Well, no surprise, Congress decided that “junk” wasn’t worth a deduction.
The new rules for 2006 say that your donations of used clothing and household goods must be in “good used” or “better” condition, or you can’t deduct them as a charitable contribution. Of course the law doesn’t define what it means to be “good used” or “better,” so you have to use your best judgment.
Get a Green Thumb
Thanks to the Energy Tax Incentives Act of 2005, there are a few new credits — albeit not very large ones — for folks who attempt to save the environment.
• For tax years 2006 and 2007, you could get a tax credit for some of the energy-efficient paraphenalia you add to your home, like new skylights, outside doors, high-efficiency furnaces, water heaters and central air conditioners. So deduct 10 percent of those costs. Unfortunately, the credit maxes out at $500 but, hey, it’s better than nothing.
• You can claim a 30 percent credit for the cost of the solar energy systems you install to heat the air or water in your home. Big note: If you install a heater in your pool or hot tub, that cost doesn't count. This credit is capped at $2,000 apiece for home furnaces and water heaters, and is available for vacation homes as well.
• If you bought a hybrid car in 2006, you can get a credit of up to $3,400 for it. The credit varies among the different hybrids, though. For example, the credit on the Toyota Prius is $3,150, but the Ford Escape hybrid 4WD will only get you a $1,950 credit. Again, it's better than nothing. Just keep in mind these credits are limited to the first 60,000 hybrids that the manufacturer sells. So if you buy the 60,001st car, your credit will decrease and eventually the available credits will be phased out completely.
Check out the IRS web site at irs.gov for a full listing of the hybrid cars and their corresponding credits.
Tracy Byrnes is a New York Post business writer and a regular guest on The Cost of Freedom.
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Tracy Byrnes joined FOX Business Network (FBN) in October 2007 as a reporter.