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Charitable Donation Tax Rules

Charitable Donation Tax Rules

If you make a donation to a non-profit organization to further a good cause, you may be eligible for tax benefits. If you itemize each donation when filing your taxes, the total donation amount may result in a reduction of your total taxable income. As a result, you will pay less for your taxes. To achieve this result, it is important to keep in mind important guidelines from the IRS.

Investigate the organization where you donate

To begin, make sure that you are making a donation to a reputable organization that has achieved 501(c)(3) status with the government. This ensures that the organization is recognized by the government as being financially well-managed, with a good mission and functioning oversight through a Board of Directors. To prevent charity scams, the government will not make a deduction for a donation to an organization that does not have this status. However, places of worship for religious organizations are an exception to this rule.

Make a donation

Your donation must be either monetary or property. At most charitable organizations, it is easy to send a check or make a donation online. The donation must be actually received by the organization by the end of each calendar year in order to be included in taxes.

If you would like to donate property, there are many options for doing so. Assemble all of the items you would like to donate, including vehicles, boats, food items, clothing items, and more. Make a list of all of the items along with the determined market value of the item. When you donate the item, don’t forget to tell the non-profit organization the market value of the item, because they will need this information when they issue a tax receipt. For items worth over $500, it will be essential to have documentation from the non-profit organization that they received the item.

File the right paperwork

Keep all records of the donation, including cancelled checks and electronic e-mail receipts for donations given online. Regardless of the donation’s form, it is important that the charity issue you a formal receipt for tax purposes. Keep records of all of your donations in one place so that they are easy to find when you are ready to file your taxes.

Itemize your donations

When filing your taxes, you must enter each donation one at a time on your taxes. Your donations must be itemized so that the IRS can determine the appropriate amount for the deduction.

Giving to a non-profit is an excellent way to decrease your tax burden, and Attorneys Tax Solutions is available to help you with any of your questions.