8 Steps To Foolproof Charitable Tax Deductions

8 Steps To Foolproof Charitable Tax Deductions

Its a win-win situation – you cut your tax bill, and a charity gets the money they need to help people in your community. The Federal Tax Code changes yearly, but the IRS continues to allow you to write off contributions to charity…as long as you make them to an IRS approved organization, and you itemize your deductions when you file. Here are 8 important tips to be sure your donation is deductible, whether you donate money or tangible character like an automobile, truck, boat or already a golf cart.

1: Make sure you see the 501 (c)(3). If you dont want the IRS to disallow your deduction, make sure you make your contribution to a qualified charity. The safest bet is to make your donation to a 501 ( c )(3) organization. It has to be a charitable organization – you cant deduct contributions to individuals, political organizations or people running for office. If you want more information about finding the right organization to give a tax deductible contribution to, go to the IRS website and download Publication 526.

2: If you want to deduct, you have to itemize. Its that simple. You have to file Form 1040 and itemize your deductions on Schedule A.

3: Make sure you subtract what you get from what you give. If the charity you donate to gives you anything in return for your donation, like the free vacation vouchers offered by some charity car donation programs, you need to subtract its worth from the amount of your contribution. at all event you have left over is the only amount you are allowed to deduct from your taxes. This goes for any goods or sets you receive when you donate to a charity, whether you get tickets, gift cards, vacation vouchers or merchandise. Subtract what you got from what you gave and youll be fine.

4: Specific types of donations have specific types of deductions. You can usually value stock or other non-cash character at fair market value. Used household items or clothes usually have to be in pretty good condition if you want to deduct their value. If youre donating a used means like a car or truck to charity, reputable charities will provide you with the proper paperwork for your tax deduction.

5: If you know the fair market value of your donation, you probably know how much of a tax deduction you can claim. Fair market value is the term used for the price someone who wants to buy character, a means or an item would pay you for it, if both of you have all of the facts of the character, item or means are known and neither of you have any outside pressure to buy or sell.

6: If you dont have a record, the IRS wont play. If the contribution you want to write off is cash, a check or another kind of monetary gift, the IRS requires you to have to have an permissible record of it. permissible records include payroll deduction records, bank records or a written receipt from the charity that includes the name of the charity, the date of your contribution and the amount you donated. If you make a donation to a charity via a text message, you can use your phone bill as proof – if your phone bill shows the name of the charity you contributed to, along with the date and amount of your donation.

7: The flip side of records. If you make a contribution of cash or character to a charity that is worth $250 or more, you need the same kind of records outlined above. You will need to show a bank statement or record, payroll deduction slips or a receipt showing how much your monetary contribution was, or describing the character you contributed. The records will also need to disclose whether the charity gave you any goods or sets in exchange for your contribution. In many situations the same documentation can outline the written description of monetary gifts and the required acknowledgement for gifts of $250 or more. If your total non cash deduction is over $500 for the year you need to fill out IRS Form 8283 and attach it to your return.

8. A final observe for those with extreme generosity. If you contribute character or items with a value of $5000 or higher you will need to complete Section B of Form 8283. Completing Section B usually method you have to get a specialized appraisal.

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