Reduce your tax burden by taking action now.
Certainly, if you’ve been faithfully donating to your church, to a civic group or other organization, you’re likely to continue to make contributions on a regular basis.
Employing a year-end giving strategy is sensible ss charities can reap from your generosity. Moreover, by increasing your donations now, you can ensure that your tax burden is reduced accordingly. Please read on for some tips on how to maximize your giving before the calendar quickly changes.
Individuals and businesses
Private citizens and businesses can each benefit from making charitable donations. However, not all charities are eligible to receive tax deductible charitable donations. This doesn’t mean you cannot give to a charity that doesn’t quality. Rather, it means you cannot take a tax deduction. IRS Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, offers a list of organizations eligible to receive tax-deductible charitable contributions.
Clothing and personal items
Gather up your old clothes and household goods and call the Salvation Army for a pickup, right? Well, yes. However, those items must be in good used condition, if not better. No sending your vagabond clothes to a charity and you had better fix that table that is missing a leg. Obtain receipts and value your donation based on fair market values. If you donate anything worth over $500, get a written appraisal to price your item. Include Form 8283 with your tax return for items valued for more than $500.
Donating your automobile
Consumers are still donating their automobiles, although the rules have changed. The new rules also apply to donated boats and airplanes. Typically, your donation is limited to the gross proceeds from the sale of that item. This means you’ll need to obtain a receipt from the donee if the item sold is valued for more than $500. Use Form 1098-C or a similar statement provided by the donee and include it with your tax return.
Although you can give cash, why not create a paper trail by giving a donation? This doesn’t mean the charity cannot receive greenbacks, but you’ll want to be certain that it credits you with the donation. What the IRS wants to see is proof that you made the donation. A credit card receipt, bank statement or letter from the charity is sufficient, but your word is not.
Timing your donations
Taxpayers may wonder if donations made one year are good for the previous year. For example, if you make a donation on January 3, 2012, will that be something you can declare on your 2011 tax return? That answer is no. If you make a credit card donation, the date can be no later than December 31. If you write out a check, date it December 31 and if it is cashed shortly thereafter, you can take the deduction in the year that the check was written.
Itemizing your donations
Unless you file Form 1040, Schedule A, you are not eligible to take a charitable deduction. This means that if you’ve been using Form 1040-EZ, you’re only eligible to take the standard deduction. This might still work out for you or you could miss taking a significant deduction. Work with a tax advisor if you aren’t certain how to proceed.
Plan your giving strategy now before the busyness of the holiday season overtakes you. Once Thanksgiving rolls in, you’ll find yourself balancing personal and business obligations that may carry you into the new year.
- Victory Organizer Publishing
- Publisher: Independently published
- Paperback: 100 pages
- CENTRAL BOOKS
- Caroline Fiennes
- Publisher: Giving Evidence
Last update on 2020-03-19 / Affiliate links / Images from Amazon Product Advertising API
Helpful article? Leave us a quick comment below.
And please give this article a rating and/or share it within your social networks.