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Tax Toolbox


Doing your taxes can be less frustrating, less time-consuming and less costly if you're prepared.

Charity begins at the state tax return

Want to contribute money to a charity? Don't whip out your wallet. Fill out your state tax return.

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At least 41 states and the District of Columbia include lines on individual tax forms where taxpayers can contribute to selected organizations, according to the Federation of Tax Administrators. The grand total: 220 programs that taxpayers can give to while also giving the state its tax due.

The donations are referred to as check-offs, since most forms contain a box the taxpayer checks to make the donation.

States usually let taxpayers donate part or all of their state refunds to a cause. Some permit filers to increase a tax payment to boost the donation. A few allow taxpayers to redirect part of their state tax liability, but this is limited to political campaign funds and does not affect a filer's refund or overall tax bill.

Charities featured on state tax returns run the gamut from organizations supporting research of chronic diseases to groups championing wildlife protection.

Uncle Sam initiated check-off boxes in 1972 by allowing taxpayers to designate $1 to a special presidential campaign fund. (It's still around, but $3 per taxpayer now.) In 1977, Colorado became the first state with a check-off program, with the original donations benefiting wildlife.

In the quarter century since charity check-offs first appeared, they've been productive. According to the latest data collected by the FTA, $32.8 million went to state check-off programs on state returns processed in 2002. That's a $5.5 million jump from the previous survey in 2000 and the largest two-year increase reported by FTA.

Benefits and costs
Donating money to charity via your tax return doesn't offer you any special state or local tax consideration. It's a deduction, but no more or no less than one made the old-fashioned way by writing a check.

In fact, it could be a bit more tedious for the donor. If you're not a meticulous record keeper, you'll need to remember to claim your tax-form deduction on next year's federal (and where applicable, state) return.

That said, the charity check-off is relatively painless, since it's usually coming out of a tax refund that you haven't yet seen.

And the programs obviously are a boon to charities. California's program generally ranks at the top of the philanthropic gift meter. Golden State officials report that in fiscal year 2001, taxpayers donated more than $4 million to charities via tax returns.

Only states experience a downside. Letting taxpayers donate to causes on tax returns creates more paperwork. The program's popularity has even led to crowding on some state returns, notes the FTA, forcing the creation of separate forms just for check-offs. "This adds to their costs of processing tax returns," says the organization, "and can lead to a greater number of errors."

But states are not likely to end the practice. Tax officials generally view the administrative costs as low, considering how much money is raised for charities. California officials say it cost the state $64,362 to administer the check-offs that produced the $4 million-plus in donations.

-- Updated: Feb. 14, 2006
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