Managing Your Charitable Contributions

If you’ve ever donated money to a charitable organization, you’ve probably experienced the immediate and ongoing communications from that charity asking you for more money. While I understand the organization’s need to generate funds, it’s frustrating to me that this is how some of my donation is being used. Is it likely that, having just made a donation, I will make another one so soon? Well, maybe I would if I were disorganized and didn’t know how recently I had just donated to them.

That is one reason why it’s important to track your charitable donations. Another is to simplify the reporting of your donations at tax time. Since we are at the beginning of the year, this is a good time for you to start tracking your donations, if you aren’t already.

I manage my charitable giving in a simple Excel spreadsheet. It has the following columns:

  • Charitable organization
  • Date of gift
  • Amount
  • The same three columns for last year.

I keep my spreadsheet sorted by the name of the organization. When I get a piece of mail from a charity asking me to donate, I can easily look it up on my spreadsheet and see when I last donated. I like having last year’s donation information easily available, since I donate to most of my pet charities once a year, and it’s helpful to see when I donated last year, and how much.

Having my donation information in a spreadsheet makes it easy for me to know exactly how much I have donated that year.  At the bottom of the spreadsheet, I also keep a list of my “in kind” donations — that is, the thrift shops to whom I have brought bags of goods, along with my estimate of how much those goods were worth. At tax time, I can easily report to my accountant the total amount of my tax-deductible cash contributions, as well as my in kind donations.

In case you get audited (as I did this past spring), it’s also important for you to keep the acknowledgement letter that you get from each charity. It tells you how much of your donation was tax-deductible, and verifies that you received no goods or services in exchange. When I was gathering my papers for my audit, I discovered that for on-line donations, the acknowledgement I received did not always have that information on it. I ended up having to contact some of the charities to ask for the appropriate documentation. That is why I have started making donations by mail again, as the mail acknowledgements are generally better.

If you have no surefire way to track your charitable giving, take a few minutes now to set up a spreadsheet on your computer. You’ll thank me next year at tax time!



Let’s Start at the Very Beginning

Remember back to last spring when you were preparing your taxes. Pretty annoying, right? Didn’t you hate digging through all your papers to find relevant information, some of which was already more than a year old? I bet you made a vow back then that you were going to be more proactive in the future.

January is a great time to get things set up for a smooth tax process. As I described in Reducing the Pain of Tax Time, setting up some Excel spreadsheets now will make your life so much easier when you starting working on your 2016 taxes. Each time you execute a transaction that is going to be included somewhere on your tax return, enter it in the spreadsheet. It’s a no-brainer to keep track of that information throughout the year, rather than having to dig it up after the year has ended.

Here are some items that you can be tracking:

  • Charitable donations
  • Medical and dental expenses
  • Home office expenses (electric, cable, phone)
  • Non-reimbursed business expenses
  • Education expenses
  • Cash income

The great thing about Excel is that it easily computes totals. So when tax time comes next year, you’ll have your totals all ready!

You’ll still need to hold on to any proof of expense (receipts or bills) so create a Taxes folder — or multiple folders — to put those in. Get into the habit of entering the data into the appropriate spreadsheet prior to filing away the paper. For expenses that come to your attention electronically, develop the habit of opening the spreadsheet and recording the data as soon as you get the proof of expense, whether it comes to you via e-mail or on-line.

I guarantee that this method will simplify your life at tax time!  So what are you waiting for? Go set up some spreadsheets!

Ditching Some Tax Paperwork

Let’s assume that you dutifully filed your 2013 taxes in recent months.  You’ve got to hold on to your supporting paperwork for three years, since that is how long the federal government has if they decide to audit you.   (If that number surprises you, see my earlier post entitled “How Long Should I Keep My Personal Tax Records?”)  Most states — including my state, New York — also only have three years to audit you.   (You can check your state here.)

It’s annoying to have to hold on to all that paperwork — but I may be able to reduce how much you need to save.

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Reducing the Pain of Tax Time

Now that April 15 is safely behind us, it’s time to start thinking about how to make tax time easier next year.  I know you’d rather not think about taxes again for another 10 months, but taking a few small steps throughout the year will alleviate much of the pain.

The key to simplifying tax time is to keep track of your tax-related income and expenses throughout the year.  Throwing everything into a shoe box and then trying to make sense of it later can be very difficult.

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What Do You Really Need to Shred?

Very often, when I am helping a client go through a huge pile of paper clutter, the client insists that any piece of paper that has his/her name and address on it must be shredded.  I have tried to convince my clients that this wasn’t necessary — after all, your name and address are easily obtained on the Internet –but most of them were not reassured.

Thus I was excited when I heard about a class last year for organizers on the topic of Identity Theft, featuring Julie Crump, Senior Vice President of Compliance and Security for Independent Bank.

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