How Charitable Donations Reduce Your Tax Burden

How Charitable Donations Reduce Your Tax Burden
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    Making donations to your favorite nonprofit organizations can reduce your overall tax burden.


Charitable donations made to your church, synagogue, mosque or other religious group as well as to the Red Cross, the American Cancer Society and to Goodwill can be declared as deductible expenses when filing your federal income taxes. You can reduce your tax burden by tracking your donations to qualified nonprofit organizations.

Qualified Donations

Not every donation you make can be deducted from your income taxes. The IRS says that for donations to be deductible, they “must be made to qualified organizations.” That also means that payments to individuals are never deductible.

Qualified or exempt organizations are listed in the IRS database. You can search this site and make note of IRS Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code, to learn if your donation is tax deductible. Other qualified organizations may include educational, scientific, literary and war veterans organizations. Other groups include certain fraternal organizations, nonprofit cemetery corporations and civil defense organizations.

Make Contributions

Throughout the year, you can make contributions to qualified charities and keep those donations in mind when it comes to filing your taxes. Your donations can include tithes and offerings to your church, money that you give to your local Boy Scout or Girl Scout troops, monies you place in a Salvation Army kettle and more.

Keep record of your canceled checks and obtain receipts for donations in any amount from $250 or more. Obtain receipts for noncash donations such as clothing, furniture and household goods. Familiarize yourself with IRS rules for donating a car, a boat or an airplane.

Itemize Your Taxes

You can make all the donations in the world, but fail to achieve the maximum benefit by not itemizing your deductions. This is particularly important for taxpayers that own a home or have high income, legally allowed tax breaks that can save them money.

File your federal incomes taxes with Form 1040 and report the value of your cash and noncash gifts on the appropriate line. Add up all of your deductions — this amount will offset your income and reduce your overall tax burden. If your tax return is especially complex, work with a tax accountant to find the maximum deductions as allowed by law.

Tax Notes

Besides filling out Form 1040, there are related forms that must be included with your tax return including Schedule C. Fill out Form 8283 if the amount of your noncash gift is for more than $500.

See Also3 Tips For Reducing Your Taxes


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Categories: Tax Tips

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".