Your Taxes – Give A Little, Get A Lot

It’s that special time of year again – Open Firearm Tax Season!  It’s our annual realization that each one of us is an important cog in the big machine known as government.  No, I’m not going to get all political about this because I think most people with a functioning brain know that taxes are one of those birth rite guarantees in our lives.  Sure, people can protest for change to the system and politicians can debate changing the tax laws to make them more fair for everyone.  But if you want the services you’ve come to expect from your government at any level, you’re going to pay taxes.  Plain and simple, end of story.

During this special time of year accountants and tax preparers shine.  This is their holiday shopping season when the confused masses pay zillions of dollars for their services even if they, themselves could fill out their own taxes.  This is because of the combination of being scared stiff of an audit and the ultra complexity of the modern tax laws.  Everybody wants a refund, not everybody is eligible for a refund.  Some people just throw up their arms and succumb while others shell out the cash to find every little loophole in the tax code and take advantage of it.  The tax laws change so much from year to year that what worked for you last year might not work for you this year.  Plus, everyone has their own tax situation.  If you’re not filing a 1040EZ, your tax configuration can be as individual as you are.

Isn’t that special?

My wife and I have been married fourteen years and we decided quite some time ago not to have children.  I have one from a previous marriage and he’s well passed the child support years (not that it mattered from a tax perspective anyway).  We have worked our tails off to have what we consider to be a comfortable income.  Let’s look at what this means by using tax math:

(0 kids to claim as dependants + a decent income) * (14 years of marriage) = “we’re screwed”

About five years ago we did our taxes and the amount we owed the federal government was staggering.  I didn’t complain because I knew why we had to pay so much.  The marriage penalty.  No kids.  Too much income.  At that time I increased the amount of money I graciously donate to the feds in my paycheck.  The past few years I have increased it more and more to the point that I’m giving them enough extra money every month to run the economy for several third world countries.  I’ve talked to some tax people, I’ve spoken to investment people, and the bottom line is I’m being leaned on by the government because I made a decision to not add to the overpopulation of the planet and have some money to play with while I’m alive.  And when it comes to tax shelters and investments, I like to keep my life as simple as possible.  However, there is one change that we have adopted over recent years and it works for us, and it will work for you, too.

If you’re in the same boat we are, take a serious look at starting or increasing your charitable contributions.  We have found it’s our only hope to either not owing the IRS or actually getting a refund every year.  What we’ve also discovered is that we enjoy making these donations.  The way we see it, you’re giving to something or someone who needs the help, you’re getting something back from the government for doing it, and there’s a certain feeling you get from helping someone or something in need.  If you want to really feel good about it, choose your charities wisely for maximum overall feel-good stuff.  It seems like every year there are disasters all over the world that displace people and destroy things and yes, we can all help out by donating to their relief funds.  But for us, we prefer to make our donations locally.  We feel that way we can actually see the results of the help we’re providing.

We’re dog and animal lovers.  You can set me on fire, you can stab me in the eye with a red-hot poker, you can put my hand in a garbage disposal and I will always love dogs and other animals more than people.  Sorry peeps, it’s just the way I am.  Animals don’t deceive, they don’t lie, they don’t purposely mislead you.  If you have a local no-kill animal shelter or Humane Society, donating to them is a great way to really make a difference AND get that tax credit.  It takes a lot to run a shelter and they must rely on contributions to stay afloat.  Write them a check or give them a bag of dog food or go out and buy some toys and donate them.  Things like paper towels, blankets or even cleaning products go a long way at a shelter.  You can sponsor a play area or a kennel.  Of course the best thing you can do is to rescue one of the shelter’s residents, but that doesn’t work for everybody.  If you’re an animal lover but you don’t have a local shelter, find your local chapter of the ASPCA.  They have several donation options that you can set up.  And darn it, when you give to them it just plain makes you feel good.

I don’t know about you, but clutter drives me crazy.  Nope, I can’t deal with clutter.  To me, clutter is a signal that says someone has gotten lazy.  If you have a bunch of clothes you don’t or can’t wear anymore, donate them!  Find your local Big Brothers/Big Sisters organization or the Salvation Army.  You’d be surprised how much of a credit you can get.  Even tax software has a module that calculates what every shirt, pair of socks or pants or coat is worth from a credit standpoint.  These organizations will give you a tax form with your donation but you don’t even have to use it.  Just make sure you itemize the number of each item you give to them and you’re on your way.  Last year we put six trash bags full of clothes out to the curb and we received a $1000 credit.  Almost all the clothing was in excellent condition and ready to wear.  So, someone will get some much-needed clothing, we freed up a ton of space in our closets and we get the tax credit.  Everybody wins!  You can donate more than clothing to these places.  You can also give unneeded furniture and electronics.

Everyone has someone at work that participates in charity walks, bike rides, etc.  Those people are out there on the front lines doing the work to help a cause.  You can help them make a difference by writing a check to sponsor them.  Whether it’s a Lupus walk, a muscular dystrophy bike-a-thon or an all-night poker tournament, these events are the grass-roots efforts to fund many charities.  Chip in and help and get that tax credit!

Every community has some sort of organization that helps people in need.  Whether they’re offering services such as family counseling, after school activities or career training, donating to these local efforts helps strengthen your town from the inside out.  You can give your time, computer hardware or your expertise and claim that when you file.  If you have a local Boys or Girls Club, check with them to see what you can do to help.  It’s an investment in your village that can only help and it’s well worth your while to get involved.

Of course you’ll want to use some common sense in your giving strategy.  If you donate huge sums of money, that can raise an audit flag come tax time.  Go ahead and do that if you wish, but document everything.  Even with your smaller support, make sure you have access to cancelled checks to prove what you’re claiming.  A thorough tax audit can never hurt you if you’re on the up and up.

These are just some of the ways we give back and help ourselves at the same time.  Even if you’re happy about the results of your tax filing, make charitible contributions a part of your annual budget.  In the end, the beauty of this isn’t centered on that tax refund.  It’s the feeling you get when you know you have helped someone or something that needs that help.  At the end of the day, helping people is what being human is really all about, Charlie Brown.

Here are some places we support in our little corner of New England. 

Massachusetts MSPCA

Buddy Dog No-Kill Shelter

Massachusetts Big Brothers/Big Sisters

Some friends of mine in Texas that could use your help

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