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MNCPA PERSPECTIVES

Giving to the max has its tax benefits on Minnesota returns

November 8, 2019  |  Carolyn LaViolette

Giving to the max has its tax benefits on Minnesota returns

Minnesotans give generously to local charities every year. Charitable donations bring a warm feeling, support good causes and, in some cases, provide a tax benefit on your Minnesota tax return.

Some taxpayers may choose not to itemize charitable contributions on their federal return due to the increased standard deduction. But Minnesota tax law continues to offer a charitable contributions subtraction to qualified taxpayers — even for those who don’t itemize.

Minnesota’s charitable contributions subtraction is available to taxpayers who donate at least $500 in qualified contributions, including cash and goods. The total deduction amounts to 50% of the excess of charitable contributions over $500, which is then subtracted from your taxable Minnesota income.

If you’re planning to claim this subtraction on your tax return, make sure you complete the following steps:

  1. Research your charities. All too often there are stories of scammers posing as charitable organizations. Ensure your donation is used toward its intended purpose by doing your research. The Minnesota Attorney General’s Office regulates charitable fundraising and has published tips to help you identify valid charities.
  2. Determine if your charitable donations qualify for the subtraction. Not every act of charity is deductible in the eyes of the IRS. To determine if the organization you donated to qualifies, visit the IRS tax exempt organization search tool to verify its status.
  3. Keep track of your records. As with any deduction, proper record keeping is vital to substantiate it. Keep any receipts, statements or letters issued by the charity acknowledging your donation. If donating goods, keep a log of the items donated and their fair market value. Remember: no record, no deduction.

Certified public accountants (CPAs) understand the tax laws and regulations concerning Minnesota’s charitable contributions subtraction. With a CPA in your corner, you can feel confident that your donations will benefit both the recipient and your tax return.

If you don’t have a CPA, start your search with our CPA Referral Service to start planning for next tax season.

Topics: Taxation-Individual

Carolyn LaViolette

Carolyn LaViolette is the MNCPA communications manager, working to enhance members’ professional reputations through content, media relations and public affairs. She is also the MNCPA’s unofficial pianist and has tickled the ivories at multiple MNCPA events. Outside of her love for writing and music, Carolyn spends her time playing with her two daughters, attending Tommie football games with her husband, and memorizing the lyrics to musicals. If you can’t get tickets to Hamilton, she is happy to sing the soundtrack for you. Carolyn can be reached at 952-885-5530 or claviolette@mncpa.org.

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