A charitable contribution is a contribution or gift to a qualified organization such as nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals.
- Are you interested in saving money?
- Are you looking for additional tax deductions?
- Do you have any unwanted or unused items in your home?
You would be surprised at the amount of tax deduction you could receive by making a charitable contribution.
Charitable contributions are a good way to reduce your tax burden while helping others at the same time.
- In general, if you own a home, are paying a mortgage, you can benefit from making charitable contributions, saving 10-38 cents in taxes for every dollar donated.
- To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution. Fair market value (FMV) is the price that property would sell for on the open market. The FMV of used household goods, or clothing is usually much less than the price paid when new. The price that buyers of used items actually pay in consignment or thrift shops is a good indicator in determining values.
- Jewelry gems, paintings, antiques, objects of art, and collections almost always require a specialized appraisal. You can deduct your contributions only in the year that you make them, unless your donations exceed set limits, in which case, the excess can be carried over to succeeding years.
- Qualified donations can be as much as 50% of your adjusted gross income for the year; however, in special cases, they may be limited to 20% or 30% of your adjusted gross income.
For cash contributions, you must keep a cancelled check, receipt, or other reliable written records that show the name of the charitable organization, the date and the amount of the contribution.
- For non-cash contributions, you must keep a receipt from the organization showing the name of the organization, the date made, and a reasonable description of the property donated. If you receive a benefit as a result of a donation in the way of goods and services, you can deduct only the amount of the contribution that is greater than what you received.
- To deduct car expenses, directly related to the use of your car in giving services to an organization, you must keep regular and timely records.
For tax questions or other tax savings tips, you are welcome to call us or call the Internal Revenue Service during regular business hours at 1-800-829-1040.