Money Management

Giving to charity earns you a deduction on your tax break, but a little-known rule keeps many from claiming it. Here’s what you need to know. 

Tis the season for charitable giving, and if you’re donating some of your hard-earned cash, you should be proud of yourself. Your donations can help people in need all year round. And they could benefit you when it’s time to file your taxes — but this isn’t a guarantee.

There is a charitable donation tax deduction, but there’s an important stipulation that keeps many from claiming it. Below, we’ll talk about why and how to decide if you should claim the tax deduction this year.

It all hinges on a critical decision

Before we dive in, it’s important to understand what a tax deduction is. It essentially reduces your taxable income for the year. Say you earned $50,000 in 2023 and qualified for $10,000 in deductions. Then, the IRS would only tax you on the remaining $40,000. This might even be enough to drop you into a lower tax bracket where you’ll lose a smaller percentage of your income to the government. So you definitely want to maximize your deductions.

One way to do this is to choose the right approach on your tax return. You have two options: claim the standard deduction for your tax-filing status or itemize deductions. Itemizing deductions is where you tally up the actual value of all the deductions you’ve qualified for during the year as well as tax credits, which reduce your actual tax bill. Some common examples of deductions and credits are:

Adoption creditAmerican opportunity tax credit (for higher education expenses)Charitable donation tax deductionChild and dependent care tax creditChild tax creditEarned interest tax credit (for making contributions to a retirement account)Home office deductionHSA contribution deductionLifetime learning creditMedical expenses deductionMortgage interest deductionRetirement account contribution deductionSaver’s credit (for making contributions to a retirement account)Self-employed expenses deductionState and local tax deductionStudent loan interest deduction

If you don’t want to bother with all this math or you don’t think you’ll qualify for that many deductions, you can opt for the standard deduction. This is a standard amount that everyone of a certain tax filing status may deduct from their tax bill if they choose. Here are the standard deductions for the 2023 tax year:

Most filers opt for the standard deduction not only because it’s easier, but also because many cannot come up with enough itemized deductions to exceed their standard deduction. So claiming the standard deduction results in a lower tax bill.

Unfortunately for all those giving to charity this year, it’s only possible to claim a charitable donation tax deduction if you itemize your deductions. If you opt for this in lieu of the standard deduction, you could wind up with a much higher tax bill.

How to decide whether to claim the charitable donation tax deduction

Whether to claim the charitable donation tax deduction comes down to how much you think you’ll have in itemized deductions. If you donated a ton of money — $50,000 for example — then itemizing deductions would certainly save you more money compared to claiming the standard deduction.

But itemizing deductions can still make sense even if your donation was modest. You’d need a lot of other deductions and credits, though. For example, if you paid a lot in medical expenses during the year, it’s possible that this amount exceeds your standard deduction, and then itemizing deductions would be the better choice. But if not, it’s usually best to go with the standard deduction.

This may all sound complicated, but fortunately, many tax software do the math for you. You provide information about the deductions you’re eligible for and the software will automatically calculate whether the standard deduction or itemized deductions would save you more.

You could also consult a tax professional if you’re not sure. Keep in mind that what’s best for you this year may not be what’s best for every year. Keep an eye on your income, expenses, and changes to the tax law to help you make the right call each tax season.

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There are two options to find winter travel deals fast: search Google Flights and Skyscanner with flexible destinations, or use travel deal services. Start now! 

As a resident of the gray, frigid Midwest, booking cheap winter vacations is a passion of mine. Sometimes you just need to get the heck out of the house and fly far, far away. I’ve taken some of my happiest vacations during the winter.

Winter travel deals are often easier to find than you might think. Good winter travel doesn’t have to involve going to a beach or taking a cruise. You can often find great winter travel deals if you want to visit big cities, travel to other countries, or choose an all-inclusive vacation package at a resort.

Let’s look at two fast, easy strategies you can start using today to help book winter travel deals.

1. Start with Google Flights and Skyscanner

Saving money on winter travel often starts with booking cheap flights. If you can get a cheap plane ticket to a warm-weather climate or a big city you’ve been longing to visit, that will often make the rest of the trip worth the money — even if you have to splurge a bit on hotels, restaurants, and other expenses.

Two of the most popular tools for searching for cheap flights are Google Flights and Skyscanner. And one reason why they’re so powerful is: both of these tools let you search for cheap flights anywhere, without having to choose a specific destination. If you’re flexible about where you are willing to visit, these tools can open up a world of possibilities.

Google Flights and Skyscanner also let you search by flexible dates. For example, I used Skyscanner to search for flights from my home city of Des Moines, Iowa to “Everywhere,” with flexible dates for the entire month of January 2024. Skyscanner quickly offered up a range of tantalizingly cheap flights to places I hadn’t imagined, like Puerto Rico for $164, and Jamaica for $289.

Using Skyscanner in this way is a great chance to generate inspiration and ideas for your next winter travel experience. (“Would I like to go to Jamaica in January? Sure, why not! For $289, I can’t afford NOT to go to Jamaica!”) If you have flexible dates and if you’re open to exploring new places, you can quickly zero in on cheap flight deals and go from there.

2. Use travel deal services (some are worth paying for)

Another quick, easy, often free method to snap up winter travel deals is to use travel deal services. There are lots of these websites on the market, and many are free but some charge a fee for subscriptions.

One advantage of travel deal services is that they offer last minute deals. Sometimes airlines, hotels, and resorts will offer their best deals to people who book at the last minute, to keep that inventory from going to waste.

Here are a few websites that are worth checking for tempting deals on winter travel.

Going™ (formerly Scott’s Cheap Flights)

“Going” is hard to Google, but it’s a well-regarded travel deal service. This one lets you set up flight alerts: you go to Going.com, provide the name of your home airport, and then you’ll get emails with amazing deals on ultra-cheap flights — like 40%-90% off normal airfares. Some of the recent deals advertised on Going.com include:

Boston to Reykjavik for $100New York to Barcelona for $282Los Angeles to Athens for $460

Going™ has a free membership, but if you want to get even more deals with faster availability, you can sign up for a Premium membership for $49 per year, or Elite membership for $199 per year. Premium gives you access to hilariously cheap Mistake Fares (when airlines accidentally list flights for a ruinously cheap price, but still have to honor the mistaken fare), and Elite lets you see cheap flights in business class.

Dollar Flight Club

This is another cheap flight alert service. Dollar Flight Club sends you an email whenever a super-discounted flight deal (up to 90% off) pops up at your chosen airport. A few of the recent deals delivered by Dollar Flight Club include:

Greece for $320 roundtripBanff, Canada for $190 roundtripCosta Rica for $210 roundtrip

You can join Dollar Flight Club for free. It also offers a Premium membership for $69 per year (that unlocks additional deals, such as pricing mistakes and other shockingly cheap flights) and Premium Plus+ for $169 per year (dedicated to deals on business class flights).

Travelzoo

I used to subscribe to Travelzoo back when it was a simple email newsletter. But now it’s a sophisticated website that you can browse to see an array of colorful, cheap vacation offerings; it’s like window-shopping for winter travel deals. Travelzoo membership used to be free, but from now on it costs $40 per year (starting from Jan. 1, 2024).

When I searched Travelzoo for last-minute winter travel deals, I quickly found several intriguing options, including:

Turkey: weeklong guided tours starting at $1,070Cancún, Mexico: a four-night vacation at an all-inclusive resort, with airfare, starting at $1,139Japan: 10-night trip, including airfare and hotels, starting at $2,999

Another benefit of travel deal services like Travelzoo is that its website quickly shows you a wide range of vacation packages, such as cruises, tours, or all-inclusive resorts. Sometimes it’s faster (and cheaper) to get great winter travel deals where the entire vacation is planned for you.

Bottom line: Want to find great winter travel deals? Start now. You can be proactive and search for your own cheap flights on Google Flights and Skyscanner. Or relax, grab your credit card, and let the deals come to you with travel search services and cheap airfare email alerts. Your next great vacation is waiting!

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

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Want to maximize your tax breaks? Make sure you know the IRS rules and steer clear of these mistakes in itemizing deductions. 

Itemizing deductions can be a good strategy to reduce your tax bill — but only if your itemized deductions add up to a bigger number than your standard deduction. Most taxpayers end up being better off taking the standard deduction, and about 90% of tax returns do this, according to IRS data.

The standard deduction has more than doubled since the passage of the Tax Cuts and Jobs Act in 2017. One good thing about the larger standard deduction is that it has helped make it simpler for many Americans to file taxes. But if you have enough deductions to itemize, this can help you reduce your taxable income even more.

Let’s look at a few of the biggest mistakes in itemizing deductions, and how you can get the tax breaks you deserve.

1. Trying to itemize the wrong deductions

Many people don’t understand which deductions can be itemized. Only a few categories of expenses can count as itemized deductions:

State and local income taxes: (aka “SALT”) Real estate taxes: (property taxes that homeowners pay) State and local sales taxes: You can deduct your state and local income taxes, or your state and local sales taxes, but not both. If you have made multiple big purchases during the tax year, such as buying a new vehicle and a new boat, or buying lots of materials to renovate a home, it might be worth deducting your sales taxes instead of income taxes. Personal property taxes: This can include vehicle registration fees. Mortgage interest: This can include interest on home equity loans that are used for home improvement. Disaster losses: You can deduct personal casualty and theft losses that are attributable to a federally declared disaster. The disaster losses must be more than 10% of your adjusted gross income.Gifts to charities: This is where you can get tax deductions for charitable donations. You must donate to qualified nonprofit organizations and keep records or receipts of your cash and non-cash gifts, according to IRS rules. Some medical and dental expenses: You can only deduct the portion of healthcare expenses that is more than 7.5% of your adjusted gross income.

To see full details on which deductions can be itemized, check out the IRS Instructions for Schedule A.

2. Forgetting about the $10,000 SALT deduction cap

One of the biggest misunderstandings about itemized deductions since 2018 (the first tax year that the Tax Cuts and Jobs Act took effect) is the SALT deduction cap. Under these relatively new IRS rules, people can only deduct up to $10,000 per household of state and local taxes. And that $10,000 deduction limit applies to state and local income tax or sales tax, but not both.

This means that if you’re a new homeowner in a higher-tax state like California or New York, you might be paying a lot of money for property taxes for the first time. But don’t count on being able to deduct property taxes from your federal taxable income.

For example, let’s say there is a married couple (filing jointly) in New York who bought their first home in January 2023. They’ve paid $500 per month on property taxes, plus $500 per month in state income taxes, for a total of $12,000 in 2023. But because of the SALT deduction cap, this couple, as a household, can only deduct $10,000 of that $12,000 — and only if their other itemizable deductions add up to be more than the standard deduction of $27,700.

The SALT deduction cap can make it harder to itemize. It can be painful to pay all those state and local taxes, knowing it won’t make a difference on your federal tax return. But if your total itemized deductions fall short of the standard deduction, you should take the standard deduction instead.

3. Claiming the wrong amount of medical expenses

Another common misconception about itemized deductions is the idea that “you can deduct your medical expenses.” The truth is that you can only deduct medical expenses and dental expenses that are greater than 7.5% of your adjusted gross income.

For example: if you have an AGI of $50,000, then 7.5% of that amount is $3,750. Let’s say you had a major surgery in 2023, and your out-of-pocket costs were $5,000. Does this mean you can deduct $5,000 of medical expenses?

No. It means you can deduct $5,000 minus $3,750, for a total of $1,250.

The larger your income, the harder it becomes to deduct medical expenses. For example, a household with an AGI of $100,000 would need to have more than $7,500 of medical expenses to be able to deduct them.

Bottom line: To avoid these mistakes (and others) in itemizing deductions, consider using tax prep software. You don’t have to go it alone when doing your taxes. The best tax prep software companies give you a few options depending on the complexity of your tax return, including access to professional tax advisors.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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You don’t have to be a frequent flyer to take cheap winter vacations when affordable winter trips are easy to find. See how to stay curious and flexible. 

Finding cheap winter vacations doesn’t have to be complicated. With a little planning, and a willingness to be open-minded about dates and destinations, you can find affordable winter trips that deliver happy memories for years to come. The spirit of cheap winter travel is all about staying curious, being flexible, and having fun along the way.

The good news is that unlike Santa Claus, great deals on cheap winter vacations really do exist. If you want fun in the sun, on the slopes, or in a faraway city, your next affordable winter trip is out there waiting for you.

Let’s look at a few expert tips on how to take cheap winter vacations.

1. Be flexible on destinations

Where do you want to go on your winter trip? If you don’t have a specific place in mind, you can often find surprisingly cheap flights and affordable winter vacation lodging deals. Popular travel search tools, like Google Flights, Skyscanner, and Kayak.com, let you search airfare prices anywhere in the world, without even asking for your credit card.

I recently ran a search on Google Flights for a week in mid-January 2024 from my home city of Des Moines to a destination of “Anywhere.” By zooming out or in on the results map, or scrolling through a results list, I was able to find some surprisingly cheap flights to faraway places and nearby cities. I found great prices on January flights from my chilly home base to warm-weather cities like San Diego ($296), New Orleans ($329), Nashville ($257), and Miami ($310).

Airbnb also offers flexible search options to search for lodging in any location and across entire weekends, weeks, or months. This can help spark new ideas for places to visit, and lets you plan your cheap winter vacation based on price, not just available travel dates.

2. Compromise on “must haves”

When planning cheap winter vacations, you need to make a list of “must haves” and “nice to haves.” What are the experiences and amenities you absolutely want to have on this trip?

Your first list of “must haves” might include:

We want to go swimming in the oceanWe want to eat amazing seafoodWe want a big enough hotel or Airbnb for the kids to have a separate bedroomWe want to be close to museums and shoppingWe want a direct flight — no layoversWe want to be within walking distance of the beach

But as you start to look for cheap flights and hotels, you might discover that your “must haves” need to turn into “nice to haves.” What if you could compromise on some of these priority items and save hundreds (or thousands) of dollars? Here’s what a new list might look like:

We want to go swimming in the oceanWe want to eat amazing seafoodWe will share a small Airbnb, and the kids can sleep on a pullout sofa bed and an affordable air mattress that we’ll buy once we arriveWe want to be a short drive from museums, and we’ll skip shopping so we can save moneyWe will take a cheap flight, even if it has a connecting flight with a long layoverWe want to be a short drive from the beach

If you look at that list, the most important parts of your winter vacation plan didn’t change — you’re going to the beach, you’re going swimming in the ocean, and you’re going to eat amazing seafood. You’re just deciding to save money on a few other things.

3. Learn to love a less-than-perfect flight itinerary

To take cheap winter vacations, sometimes you need to embrace the adventure of unconventional flight plans. Especially if you’re traveling as a family, you might need to accept long layovers, multiple connecting flights, flying out of different cities or multiple airports, and even staying overnight in a different city (a “stopover”) along the way.

For example, in 2017, I took an international vacation with my family for the first time. We wanted to go to Germany, and we found cheap flights on Iberia Airlines, the national airline of Spain. We couldn’t fly on Iberia out of our home city of Des Moines — the flight was out of Chicago O’Hare, about a six-hour drive from our home. So we drove to Chicago, parked our car at a nearby airport hotel parking ramp (which was cheaper than long-term economy parking at O’Hare), and flew to Germany with a layover in Madrid.

On the return trip, we had a stopover in Madrid. So we flew from Germany to Madrid, arrived in Madrid at 11 p.m., slept for a few hours at an Airbnb, and then caught our flight back to Chicago the next morning. It was a whirlwind visit to Spain, but it saved us thousands of dollars compared to what we would’ve paid on a more “convenient” flight.

Most elite status frequent flyers would be horrified by all the hoops I jumped through. But back in those days, I didn’t know about the wonders of airline credit cards, frequent flyer miles, and reward points. And that vacation was some of the best money I’ve ever spent. Getting to explore Europe with my children was the experience of a lifetime.

Sometimes the best way to take cheap winter vacations is to embrace a spirit of curiosity and enjoy the journey. Go to a less-fashionable destination. Go during the off-season. Go to a cold-weather city in winter. Book a goofy-looking itinerary with multiple connections and an overnight layover. If the price is right, you can make it work!

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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