Many people choose to lower their tax bill my making charitable contributions. There are certain steps that a person can take to be sure that their contributions are reflected on their tax returns.
First and foremost, be sure that you are contributing to a qualified organization. Keep in mind that ‘donations’ to individuals or certain political organizations are not charitable. If you are unsure of whether an organization is qualified, check IRS Publication 526.
If you receive any benefit for your donation, the value of that benefit does not count towards your deduction amount. This is because you received something in return for your money. For example, if you donate $100 to a charity and receive something valued at $50 in return, you can only deduct $50 as a charitable deduction. The fair market value of an item is the amount that you could reasonably sell it for on the open market.
If you wish to donate and deduct a purely monetary gift – such as one made through cash, check, or other monetary instrument – you will need a record of the transaction in order to deduct it. A bank record or a written letter or receipt from the organization with the details of the gift generally suffices. If you prove the gift through a letter, be sure the letter contains the name of the organization, the amount of the contribution, and the date. Taxpayers must itemize any deductions for charitable contributions on IRS Form 1040.
Last Updated on April 18, 2017 by The Orlando Law Group