Free Software – “ItsDeductible” – Should You Use It?

by Neal Frankle, CFP ®

“ItsDeductible” is an online software package that’s free and pretty useful. Tax deductions are great for everyone, especially if you are self-employed. Even if you aren’t self-employed, this software could be helpful. That goes for people who want to retire now or who are retired already. ItsDeductible helps you track the charitable donations you made throughout the year.

How It Works

Basically, you log on to the site and set up a free account. You don’t have to buy anything to use it, but you do have to provide your personal information, including your e-mail address.

Once you are on the site, you create a list of charities that you donate to. Then, you list the items you donated. That’s it. If you don’t know the value of the items you donated, the site helps you find those values. The site keeps track of all the donations you made throughout the year. When you prepare your taxes, you can print out a report or you can upload the information to Turbo Tax and the charitable deductions will be automatically updated as you prepare your annual tax return.

What I Like About This Software

First, it’s free and useful (two of my favorite words). ItsDeductible tracks thousands of different items as well as cash and securities. It’s a convenient way to keep track of your donations. It’s also really useful to use this tool to look up the value of different items you donate. That’s great because if you’re like me, you don’t have a clue as to how to value those items. As a result, if you donate many items throughout the year, you’ll end up getting more deductions and saving more money by using ItsDeductible.

And the software tells you how much those tax deductions are worth, too. When you set it up, it asks you general questions about your income. As a result, it estimates what your marginal tax bracket is and can therefore calculate the total value of items you want to donate.

Another great feature is that ItsDeductible reminds you to take a mileage write-off for all the traveling you did to help your charities. That’s something I normally wouldn’t even think of. Let’s say you run a Professional LLC as a therapist. If you donate time by traveling to see patients for free, this will at least help you get the tax write-off for your mileage.

Another benefit of the software is that it helps reduce your risk of an IRS audit. It accomplishes that by telling you if your total charitable deductions are in line with people in your tax bracket. That’s pretty handy. It’s also pretty cool that you can update your donations anytime throughout the year.

Who Should Use “ItsDeductible”

If you donate lots of non-financial items, this is a great tool – even if you don’t use Turbo Tax. There is no reason I can think of for passing this by. If you are really crafty, you might even consider using this software to launch your own business and run these reports for others who aren’t as savvy as you.

Who Should Not Use “ItsDeductible”

If you only donate a few items to charity or if you mainly donate money or investments, you probably don’t need this. You’ll probably forget to update the information and you would do just as well by throwing your receipts in an envelope and going through it at the end of the year.

Do you think ItsDeductible would be useful to you?

 

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