When you make a donation to charity, a tax deduction becomes legitimately due to you. That is why you should make sure to let the tax agencies know about it. Your contribution to charity or to charitable organizations can add up to a substantial deduction if you make sure to mention each contribution on an IRS Form 1040, Schedule A.
Before making the donation however, you must check for a few things. Firstly, remember that your donations won’t be eligible for tax deduction unless the organization is recognized by tax agencies. The IRS lists all the eligible organizations. In so doing, you can refer to Publication 78 which is brought out by the IRS. This list is available on internet and in public libraries.
You cannot get any tax deduction for donations to individuals, political organizations or political leaders. Also, you can’t claim benefits for gathering money for organizations by holding lotteries, bingo or any games of chance.
For all contributions made in the form of merchandise, goods or services, tax deduction is also available. Nevertheless, you can claim this deduction on the fair market value of these goods or services. For example, you can make a donation of stocks from your company. In this event the value of the stocks will be taken into account as the average of the highest and the lowest price traded on the date of its valuation.
Another possibility is to donate your car. The value of the car will be given according to its resale value at the moment of donation. You can donate planes and boats too. If the donated motor vehicle, boat or plane’s claimed value exceeds $500 and the item in question is sold by the charitable organization, the taxpayer can only get the gross proceeds from the sale.
If you are donating a personal item or a household then the deduction can be claimed on the amount that the item would cost at a flea-market price. All charitable contributions of over $250 will need a proper receipt in order for it to qualify for tax deduction.
You must remember that the only contributions up for deduction are those made during the tax year. If you paid by check or credit card, it doesn’t matter when in your account the transaction shows up. You can look for deduction only in the tax year that you used the instrument in.
Make sure you always keep a track of your generosity. Tax people will appreciate it, and you will too.
Elliott Dawson is a contributing editor at DebtFinanceArticles.com. This article may be reproduced provided that its complete content, links and author byline are kept intact and unchanged. No additional links permitted. Hyperlinks and/or URLs must remain both human clickable and search engine spiderable.