I give money every year to charity but it has never made a difference in my taxes. Is it really worth it to itemize donations?
Not to dodge this question, but it is really something that is impossible to answer without having access to your tax information. Many people benefit from the deduction. Some would be better off not deducting, as Curt points out. My answer would have to be - ask your tax preparer. Or if you prepare your own, figure the out both with and without the deduction and see which is more favorable.
Yes and No. For it to be beneficial to itemize, your total itemized deductions must exceed your "standard deduction". All taxpayers can take the "standard deduction". The amount varies, but for 2013 for married couples the amount is $12,200 for a single person the amount is $6,100.
So, unless you have other expenses eligible to be itemized your charitable donations must exceed these (or other appropriate) amounts to be "worth it" to itemize.
For most people one of two things will push them over the threshold. The first is the mortgage interest deduction. The second is combined state and local taxes which includes income and property taxes
The value of itemizing your charitable deductions really depends on the total dollar amount of your gifts. Itemizing becomes valuable when the deductions you claim exceed the standard deduction you are eligible for. If you make large donations, itemizing can save you anywhere from hundreds to thousands of dollars. However, if you aren’t seeing a difference in your taxes, it is likely because your itemized deductions amount to less than your standard deduction. If so, itemizing is unnecessary.
For example, say you are filing as single with a standard deduction of $6,100. If the sum of your itemized deductions is more than that, it’s worth it to itemize and you should see tax benefits. Keep in mind that your total deductions factor in more than just your charitable giving, such as any mortgage interest payments and out-of-pocket medical expenses. Therefore, charitable giving of $2,700 per year combined with medical deductions of $4,000 exceeds your standard deduction and should be itemized.
According to the Tax Policy Center, around 70% of people simply opt to take the standard deduction instead of itemizing. In many cases, this may not make a difference in their tax returns—but others could very well be missing out on valuable tax breaks. Be sure to keep detailed records of your charitable gifts so you can claim all the tax breaks you’re entitled to—or avoid itemizing needlessly.