Tax Information & Considerations
Giving to charity is a good way to help your community or those in need. However, did you know that when you give to charity you also help yourself. Most charitable donations are tax deductible. This means you can deduct them from your income taxes and save yourself some money. One important point to remember is that there are different rules for different kinds of donations and different kinds of charities. So make sure you know all the rules before you start deducting donations from your income taxes.
In order to get a tax break you must donate to a qualified charity. To determine if a charity is qualified to receive tax deductible donations, the charity must be identified as a 501(c) organization by the IRS. Groups that are included in this designation are religious, charitable, educational, scientific, or those that work to try to prevent cruelty to animals or children. In addition, you can take a look at the IRS publication 78 to see a list of most of the charities that are qualified.
It is vitally important that you keep records of the donations you made. The IRS will accept a canceled check as proof for donations of less than $250. If the donation is over $250, you will have to obtain a receipt from the charity that includes the amount donated and whether you received anything in return.
When filling out your taxes you will itemize your donations on the Schedule A of the 1040 form. You must separate your cash donations from your non-cash donations. If your non-cash deduction is more than $500, you need to fill out the 8283 form. Be sure the deductions are made in the same year as the donations were given.
A few other items to remember are that you use the standard 1040 form and make itemized deductions. Using the short form or taking standard deductions you will not be allowed to make and charitable deductions. You will generally be limited to deduct up to 50 percent of your adjusted gross income. If you are making non-cash donations valued at more than $5000 you will have to get appraisals of the donated property.
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