Primary motivation of donating to charities need to be humanity. In addition, donors can get good tax benefits for charity contributions.
Know the rules and benefits of charity donations
Itemize your charitable contribution
- For gaining advantage on tax returns, it is vital to itemize your overall charitable deductions appropriately.
Consider the charitable status
- Tax deductible charities means the organizations possess IRS registration, which is mandatory.
- Contributions to foreign charities, foreign government, individuals, and specific private foundations are not deductibles.
Know your contribution limits
- Contributing more than 20% of total income towards charity needs a little consideration regarding limits.
- If you donated to public charity then deduction gets limited to 50% on yearly gross income.
- Consult a tax advisor to know the applied limits because the relevant rules can be complicated.
Non-cash donation rules
- Contribution of property with ownership for over a year will gain a deduction to its fair market value.
- IRS approves donations of household things and clothes, which are in better condition.
- Taxpayers overvalue donated vehicles, so IRS checks this deduction closely.
- Fair market value must not be used unless your car gets sold to someone with low income or the charity keeps it for use.
- Make sure to learn the conditions that apply, while valuing a donated car or truck.
Maintain contribution documents
- Verification is crucial for claim against cash gifts to qualified charitable organizations.
- Change dropped in charity bucket is not accepted by IRS.
- Proper documentation is needed from acknowledged charity for tax deductions.
- The receipt needs to include name of the charity, gift value, donation date, and verification statement that nothing was received in return of the gift.