How to Reduce Your Tax Burden With Charitable Donations
To provide an tangible reward for taxpayers who make contributions to charity, the government allows them to claim an itemized income tax deduction. Contributions to charity can take different forms but fall into two categories: cash donations, which includes donations made by check or credit card, and donations of property. Knowing when to make your contribution and what documentation you need to verify your donation, should the Internal Revenue Service require it, can help you reduce your tax burden.
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Instructions
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Make a donation to a qualified charity before the end of the calendar year. Qualifying charities include nonprofit educational, scientific, religious and literary organizations. The organization should be able to tell you if it is a qualifying organization, but if you are unsure, check in the IRS's online database of qualifying charities.
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Obtain documentation of your donation from the charity to which you made your donation. The records differ depending on the type and amount of the donation. For cash contributions under $250, you can use a canceled check, but for donations over $250, you need a receipt. For noncash donations, you need a receipt except if your donation is for less than $250 and it is impractical to get a receipt, such as if you leave your donation at a drop-off bin.
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File your taxes with Form 1040 because you must itemize your deductions in order to claim your charitable donations. If you use any other Form, you cannot deduct charitable contributions.
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Report the value of your cash donations on line 16 and your noncash donations on line 17. These amounts, plus your other itemized deductions, reduce your taxable income. After adding your itemized deductions, report the total on line 29 and then transfer it to line 40 of your Form 1040 tax return.
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Complete Form 8283 for any donations of property exceeding $500. This form must be attached to your income tax return.
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