Tax Tips for Gifts to Charity
Your charitable contributions can be used toward lowering your end-of-year tax bill. To deduct charitable contributions for your federal tax return, although you must file both a Form 1040 and a list of itemized deductions on Schedule A. Remember to keep all bank records and receipts associated with charitable contributions.
Other People Are Reading
-
Amounts
-
"Forbes" magazine suggests you lump your donations whenever possible. For instance, instead of giving $1,000 a year to a charity, send $5,000 with a letter stating that this amount represents five years of planned giving. This increases your potential end-of-year deductions. A charitable gift fund is another option that allows you to invest a lump sum in a mutual fund and have the money given out at your discretion to a 501c3 charity.
Records
-
Regardless of the amount you give to a charity, you must maintain proof of the donation for tax purposes. Payroll deductions, receipts and bank records can all be used to prove the charitable donation. Instead of giving cash into collection buckets and plates, use a check. If you sent a text message as a way to donate money to a charity, the IRS will accept telephone records as a form of proof.
-
Expensive Items
-
Donation items that have a value of more than $5,000 need to be appraised before you can claim it as a tax deduction. Tax payers with these types of items must fill out Section B of Form 8283 on the federal tax return. A qualified appraiser must be listed on the form along with his value assessment of the item. Appreciated stock and an IRA can also be donated to charity for a tax deduction. The fair market value of the accounts can be claimed as your deduction.
Benefits
-
If you donated cash or an item and received a benefit in return, you must deduct the fair market value price of the benefit first before claiming the deduction. For instance, if you gave $1,000 to a charity and the organization awarded you with two baseball game tickets, the cost of the tickets must be deducted from the $1,000 before claiming.
-
References
- Photo Credit BananaStock/BananaStock/Getty Images
