It’s that time of year again, the time of year where we all get ready for the holidays. Charitable giving is at its highest prior to the holiday season, our generosity kind of overflows to everyone that we can give to at times. But there are some things that http://helpwithtaxproblems.org/ points out that you need to know before you try to just write a number on your tax form.
– Is the organization a certified non-profit organization? Most non-profits have to apply for something called a 501(c)(3) tax-exempt status, the only exemptions being religious organizations (churches, denominationally based charity organizations, etc).
– Can I give now? A pledge is not tax-deductable. You must actually be giving the money or the property during the year that you are deducting it on your taxes.
– Am I willing to put forth the effort that I would need to in order to obtain the tax credit? There is a lot of record keeping and organization involved on your part in order to claim the deduction on your taxes.
Okay, so you’ve figured all of these answers out, and you decide to give to a specific organization. Now what?
– Make sure you get documentation. You must have supporting documentation for any contribution that you make that has a value over $250, whether it is cash or property. Even if your donation does not total this much, it is still a good idea to have documentation.
– Calculate fair market value. If you are donating property, work with the organization that you are donating to in order to calculate the fair market value of the property you are contributing. If your property exceeds $500, you need to have IRS Form 8283 attached. If your property exceeds $5000, you need to have someone appraise the value of the property and document it as needed.
– Itemize. Itemizing is putting a dollar value on every single deduction. You must list every item or dollar that was donated and where it was donated to, or you will not be able to maximize your deductions.
Are there limits on my deductions? Absolutely. It’s usually limited to about 50% of your adjusted gross income. Property is limited to 30% unless it’s being sold to make money for the organization, then it drops to 20%. In some cases, the excess value on the property you donate can be claimed within 5 years of the initial donation, but if you are going to attempt this, make sure that you confer with a tax professional in order to figure everything out and to know that it’s going to make sense in the long run.
Take a look around and talk to tax professionals to see if this could matter for your needs. When all is said and done, you’ll feel more prepared to work it out and you can face your tax time without having to jump through too many hoops in order to get to that point, as well.