Archive for the ‘Tax’ Category
Charity Donations are Tax Deductible
Donations to charity are tax deductible expenses. These donations can reduce our taxable income and lower our tax bill. Not everyone will be able to deduct their charitable contributions, however. We will need to itemize our tax deductions in order to claim any charity but to get the tax deductible we need to follow some rules and regulations as without them our donations will not be considered as real donations in the eyes of government.
In some cases we can’t be benefitted such as a pledge or promise to donate is not deductible until we actually pay. Charities will let us know if they have received their 501(c) (3) tax-exempt status. Some organizations are not required to obtain 501(c) (3) status from the IRS. These include churches and other religious organizations. Another point is our donation must work for people who are eligible to itemize their deductions. We must meet record keeping requirements. This includes saving canceled checks, acknowledgment letters from the charity, and appraisals for donated property. Apart from this Taxpayers are required to keep excellent records of their charitable contributions. Under the Pension Protection Act, we must keep written records of all cash donations. Donations of $250 or more will not be allowed as a tax deduction unless we have supporting documentation. Our records must indicate the name of the charitable organization, the date of our contribution, and the amount of our contribution. Contributions of property (other than cash) are subject to strict record keeping and substantiation rules. We must be able to substantiate the fair market value of the goods or property we donated, plus keep any written acknowledgments we receive from the charity. We must make an assessment of the fair market value of the property we contribute.
Including all this we also have to attach IRS Form 8283 if our total non-cash contribution exceeds $500. In a case of car, boat or other vehicle donation where the vehicle worth more than $500, we must received a written acknowledgement from the non-profit before we can claim a tax deduction and property worth more than $5,000, we must obtain a written appraisal of the property’s fair market value.