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5 Must Know Tax Tips About Making Charitable Contributions

Tax Tip Tuesday Financial Blog Post

As you begin rounding up your tax documents for the 2018 tax season, there are a few things you should know about charitable deductions. All taxpayers who that donate to a charity may be able to claim a deduction for them on their federal tax return if it meets certain criteria.

Five Tax Tips about Making Charitable Contributions

1. Qualified Charities

Taxpayers must contribute to a qualified charity to deduct their gifts. Gifts to individuals, political organizations, or candidates are not deductible. To check the status of a charity, taxpayers may utilize Exempt Organizations Select Check on IRS.gov.

2. Itemize Deductions

To deduct charitable contributions, taxpayers must file Form 1040 and itemize their deductions. To do this|, taxpayers must complete Schedule A, Itemized Deductions and include this with their tax return when they file.

3. The Form of Donation

Some donations are not cash. For those where contributions are made in the form of property, you can only deduct the fair market value of the donated item. Fair market value is typically the cost you would get if you sold the item instead of donating. If they donate used clothes and household items, these things generally have to be in good condition. Certain kinds of property contributions like boats and cars are governed by special rules.

4. Donations of $250 or More

If a citizen donates $250 or more in cash or merchandise, they need to possess a written receipt from the charity. The statement should show:

• The amount of the donation.

• A description of any property given.

• Whether the taxpayer received any services or goods in exchange for their donation, and, in they did, then, in that case, a description must be provided along with a good faith estimate of the value those services or goods.

5. Getting Something in Return

Occasionally taxpayers received something in return for their contribution of things like merchandise, meals, or event tickets. In that case, taxpayers can only deduct the amount of the donation that is greater than the fair market value of the item received. To figure out that deduction, subtract the value of the item received from the amount of the donation.

Taxpayers may want to utilize the Interactive Tax Assistant, Can I Deduct My Charitable Contributions? It can help you determine if your charitable contribution is deductible.

 

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