Giving Back to the Community & Tax Deductions

Giving back to the community and organizations that serve it is a very generous thing to do. It not only fulfills the lives of others, but can also fulfill you. When you make a charitable donation, there are a few ways you can write it off when it comes time to do your taxes. Below are a few commonly asked questions when it comes to writing off charitable donations, and some qualifications that you might need to meet.

How Much Can Be Deducted?

This usually depends on your income. Usually, if you donate less than 20 percent of your income, you do not need to worry about how much can be deducted. For public charities, you can only deduct up to 50 percent of your contribution base. For private organizations, consider speaking with a tax adviser to determine how much the maximum percentage is that you can write off.

What Organizations Count for Tax Deductions?

The IRS has an online search tool that allows you to search for the organization you wish to make a donation towards. You’ll be able to see whether or not an organization is eligible and if they have met all requirements for tax-exempt donations. Here are common examples of organizations that are acceptable for tax-deductions:

  • Churches & synagogues
  • Local, state, and federal government (only for public use)
  • Non-profit schools and hospitals
  • Veterans groups
  • Community organizations (Boys/Girls Clubs, Salvation Army, American Red Cross)
  • Parks and recreation improvements

Can I Submit Tax Deductions for Donations to Individuals?

No. Only donations to approved tax-exempt organizations can be deducted.

Do I Need Documentation?

Yes. In fact, this is one of the most important aspects of charitable giving. Deductions greater than $250 need written proof. Should you be required to perform an audit, you’ll need to gather credit card statements, a cancelled check, or written note from the organization. This also includes any furniture or significant clothing donations you make to places like Goodwill or The Salvation Army.

What Else Do I Need to Know?

A donation is deductible only in the year it was paid. For example, if you made a donation in January of 2016, you would file it when you do your taxes in 2017.

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