Whether you're a self-employed worker who significantly underestimated your quarterly taxes this year or a W2 employee who miscalculated your number of exemptions, you may be concerned about owing a hefty tax bill in April. For those expecting to use their 2015 income tax refund to go on vacation or help purchase a new car, finding out that you instead owe thousands of dollars in back taxes and penalties can be a major blow. Fortunately, there are a number of charitable deductions that can lower your tax bill at the last minute while also helping you downsize. Read on to learn more about the most high-value charitable deductions.
Donating a car
If you have more vehicles than drivers, you might be able to benefit from car donations. Because you can only deduct the value at which the car was sold by the charity, donating a scrap vehicle or a running vehicle to a charity that only sells vehicles to auctions or scrapyards won't permit you to deduct enough to make the donation worthwhile. However, donating to a charity that will get market value for a running, serviceable car can allow you to take a dollar-for-dollar deduction if you itemize on your federal income taxes. Before you donate your unused vehicle, check to see how the charity categorizes the condition of the cars that they accept.
Donating in-kind services to a charity
If you have a special skill -- tax preparing, financial advising, or even playing music at a professional level -- you may be able to deduct the fair market value of these services by volunteering at a charity. Attorneys or doctors can volunteer at pro bono or low-income clinics to help those who can't afford legal advice or medical treatment without assistance. If you're normally paid for these skills, you may be able to donate an equivalent pay rate when providing them for free for an eligible charity.
Downsizing excess belongings
For those who are planning a move to a smaller residence or just want to declutter, donating old furniture or other items to a consignment shop or charity could allow you to write off up to $500 without much documentation. However, if you're donating items valued more than $500, you'll need to fill out several tax documents indicating where you first got the donated item(s), when it was donated, and how much the charity eventually acquired for it. As with auto-related charitable deductions, you'll only be allowed to deduct the amount for which the items were eventually sold.