Earned Income Tax Credit | Claiming Tax Deductions When Donating to a Charity

Claiming Tax Deductions When Donating to a Charity

Charitable giving is one of the best ways to help non profit organizations and, at the same time, help your finances. A qualified donation is tax deductible. When you donate to a non profit charity, you need to make sure that it is a qualified organization so that the amount you give will be tax deductible which will help you lower your income tax obligation to the IRS. By lowering your taxable income, you will owe the IRS less and therefore save more money. The more taxes you save, the more money you will have to put in your bank account to use for anything else you wish.

A major problem is that charitable giving is not without risk. Your donations are an investment in your community, the nation, and the world. It is wise to be cautious when you make your donation so you may be able to avoid scam artists who try to benefit by taking advantage of your generosity. You need to be aware of non profit organizations that spring up overnight in connection with current events or natural disasters. They may make a compelling case for your money, but as a practical matter, they probably do not have the infrastructure to get the donations to actually help the affected areas or people. Therefore, before you make your donation, you should ensure that the non profit organization you are going to support is legitimate.

When you donate anything, it is beneficial to try to claim the appropriate tax benefits. The tax benefit for donations is available for taxpayers who itemize deductions. The IRS reveals that about one-third of all filers itemize. Taxpayers who take a standard deduction cannot claim the tax deductions resulting from charitable contributions. The IRS reminds taxpayers to keep necessary records to substantiate the value of their gifts. For example, for any single gift of $250 or more, a taxpayer must have a written acknowledgment from the charity by the earlier of the date the person files the tax return or the filing deadline, including extensions. A person donating property valued at more than $5,000 must obtain a qualified written appraisal. For more information on how to take advantage of tax deductions, you can consult the charitable giving answer book.

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