How to Establish a Tax Deductible Gift
So you want to give your money to others to help do some good in the world. Great--after making your donation, though, don't think that Uncle Sam won't take your good deeds into account come tax time. You can claim the gifts that you made over the last tax year period to get tax deductions. Also, you don't have to claim the gift tax when your combined gifts for the year are under $13,000. Here now, are ways to figure out just what is considered a tax deductible gift, and how to go about claiming them on your next income tax form.
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Instructions
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Recognizing and Claiming Tax Deductible Gifts
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Go through your paperwork and figure out what may be considered a gift. In the most simple of terms, the government considers a gift to be any transfer of property (including money) to another individual where full compensation of that gift will not be returned to you.
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Eliminate items that would fall under other categories than gifts. Examples of this would be paying $16,000 in tuition for your child would be an educational tax credit, or paying $32,000 in medical bills for your sister-in-law. Also, spouses can't claim gifts from one another, and gifts to political organizations or charities can't be claimed as gifts either.
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Calculate the value of the gifts you gave that don't fall under any of the above categories. For gifts that weren't a monetary transaction, calculate the fair market value of the gift. The fair market value is the price of the object would be if neither the buyer or seller weren't under pressure to buy or sell said object. After calculating the value of all the gifts that you gave in the last tax year, you have to decide if you need to claim these on your taxes. If the amount of gifts is $13,000 or lower, you don't have to claim them. If, however, the amount of gifts is over $13,000, you have to claim anything over that amount.
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File your taxes, making sure claim your gifts. If you're unsure of how to go about filing correctly, many online tax filing preparation sites will help take the guesswork out of taxes for you, and also help you find ways to make tax deductions. For complex tax filing situations, you may want to have a tax preparer do the work for you in person.
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References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
