Sponsored - Aside from it being a good deed, donating to charitable causes is also a great way to lower your tax strain for the year. It is important to follow all the guidelines to successfully deduct donations.
- The first tip the Internal Revenue Service (IRS) says is to make sure you’re giving to a qualified organization in order to make a legitimate tax deduction
- Ask the organization for their letter from the IRS.
You can also visit the IRS Exempt Organizations Select Check online search tool to verify the organizations qualification for tax deductions. Contributions to political organizations, candidates and specific individuals cannot be deducted.
Churches, synagogues, temples and mosques are considered de facto charitable organizations. They aren’t placed on the list but they are eligible to receive deductible donations. The IRS recommends you ask them if you’re unsure at www.irs.gov.
- Choose a qualified charity.
- File form 1040 and itemize deductions on Schedule A.
- If you received benefits from the organization, you can only deduct the amount that exceeds the fair market value of the benefit received.
- Section B of form 8283 with a qualified appraisal must be completed for donations of more than $5,000.
- Make sure to get a receipt.
- Donations to individuals do not qualify for a tax deduction.
Take Solicitation Precautions
- Ask for detailed information such as the address
- Research the organization and check for scams
- Call the charity
- Save information of your donation
- Never wire money
If you think you’re a victim of a charity scam, you must file a complaint with the FTC immediately.
To learn more information about charitable tax deductions visit www.irs.gov. If you’re unsure of the process, consult your tax advisor.