Charitable Tax Deductions - 6 Things to Look For
posted
November 27, 2018
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Giving funds or non-cash items is a wonderful way to help others, and a gift to a qualified organization could entitle you to a charitable deduction against your income tax. The holiday season is a great time to consider donating.
Here are some things that are important to know before you give:
1. Always get a receipt – even for cash. A receipt must include the date, the amount the donation was for, and the organization that received the donation. You can claim a deduction for a donation of $250 or more if you have proof from a qualified organization that you made the contribution.
2. If there was any incentive for your donation, you need to know the value of the incentive. If you make a donation and receive something in exchange, you will need to deduct the dollar value of what you receive in return from the value of your donation. If you do not know the dollar value of the good or service you receive in exchange, just ask the organization and they should be able to provide you with this information.
3. Good records are important, especially when it comes to donations of non-cash items. For non-cash items, you must be able to prove the value of your donation. A general rule: you can deduct items at their fair market value. This means the value that you’d be able to sell the item for in its current condition.
4. Donating appreciated assets can provide you with a double benefit. You will not only be able to deduct the fair market value, but you can avoid paying capital gains tax.
5. There are limits to charitable giving deductions, but they’re very high. If you contribute more than 20% of your adjusted gross income, you’ll need to pay close attention to the limits.
6. If you volunteer, you can’t deduct any time spent volunteering. You can deduct transportation costs and other expenses related to volunteering, so make sure to keep a record.
Tax rules related to charitable giving can be complicated – make sure you do your full research and talk with a professional. No matter what, it’s important to make sure that everything is documented, especially with dates and donation values.
If you’re looking for an easy way to give back to organizations in your area, check out GiveIowa. Each month a new organization is featured through the program; it can receive online donations through GiveIowa for the entire month. The first $250 in donations made is doubled by Greater Iowa. You can click here to check out this month’s organization!
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