Claim charitable tax deduction on your generosity
|
| |
If you have been donating to charity you should let the tax agencies know, and avail the charitable tax deduction that becomes legitimately due to you. Your contributions to charitable organizations can add up to a sizeable deduction if you itemize them on IRS Form 1040, Schedule A.
But before you make the donations you must carry out a few checks. You must remember that only donations made to organizations that are recognized by tax agencies are eligible for tax deduction. You can refer to Publication 78 brought out by the IRS that lists all such organizations. This list is available online and in several public libraries too.
You cannot get tax benefits on donations to individuals, political organizations or political leaders nor can you claim benefits for spending time raising money for organizations by holding raffles, bingo or any game of chance.
Tax deduction is also available on contributions made in the form of merchandise, goods or services. However, this deduction can be claimed on the fair market value of these goods or services. For instance, you may decide to make a donation by gifting stocks of your company. In this case the value of the stocks will be calculated as the average of the highest and the lowest traded price on the date of valuation.
You can also donate your car. Its value will be calculated as the resale value at the time of donation. Planes and boats can be donated a well. However, if the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer is limited to the gross proceeds from the sale.
If you are donating a household or personal item then the deduction can be claimed on the amount that the item would have fetched in a garage sale or at a flea shop. All charitable contributions over $250 need a proper receipt to qualify for tax deduction.
You must remember that only contributions actually made during the tax year are up for deduction. If you have used a credit card or issued a check, it does not matter when the transaction shows up in your account. You can seek deduction only in the tax year that you used the instrument.
So go on and keep a list of your generosity. The tax people would appreciate it. So would you.
Written by: the Editor
Want more tax deduction articles?
Subscribe to the ArticlesHere.com Newsletter now! We're constantly updating our site. Just fill up the form below and we'll email you whenever we've published new tax deduction articles.
Your email address is private and confidential and will NOT be rented or sold to any party. You can unsubscribe at anytime. We hate spam as much as you do.
|
Additional tax deduction articles
Follow the rules when claiming business expenses tax deduction
If you are an employee you can claim business expenses tax deduction on several expenses that you incur in conducting the company's business. These deductions should be claimed as itemized deduction on Schedule A, Form 1040.
The IRS or Internal...
Federal income tax deduction can provide handsome savings
The federal income tax deduction is a statutory requirement under the American laws. It has to be paid by all American citizens who fall under the tax bracket as decided by the American government. Taxable income is calculated by removing (a)...
|
