The Ultimate Guide to Charitable Contributions
Charitable contributions are given by those who make donations for a charitable cause, which often reflects not only the goodwill of the donor, but positive values as well. Charitable contributions are famous among the rich, the famous, and major corporations. However, charitable contributions can also be given by those who have something extra to give, in cash or in kind. Not only will charitable contributions bridge the gap between those who are fortunate and those who are not, but it also bring a reward other than personal gratification – and this is in the form of tax benefits.
According to the IRS ( Internal Revenue Service ), a charitable organization must be a qualified organization in order for you to receive a tax deductible. These deductions are itemized on Form 1040, Schedule A, which can be downloaded from IRS Online ( www.irs.gov ). Charitable contributions can take many forms, where people can donate financial assistance, goods, and services to the chosen charitable institution. If you like to see a list of eligible institutions where you can make your charitable contributions, you may see the Cumulative List of Organizations in Section 170 c of the IR Code of 1986. When gifts are concerned, tax laws can be complex, and it is important to seek professional advices.
Who Qualifies for a Charitable Contribution Deduction?
( Source: IRS or Internal Revenue Service )
1. The government of the United States or the District of Columbia
2. A community, corporation, fund, trust, or foundation formed in the United States, under its laws, or those in District of Columbia
3. Religious organizations, churches, or synagogues
4. War veterans organizations in the United States
5. A Non-Profit Fire Company doing Volunteer Works
6. Civil Defense Organizations under the US federal, state, or local laws
7. Domestic lodges and fraternal societies
8. Non-Profit cemeteries dedicated in perpetually caring for the whole cemetery
9. Educational, scientific, or civic organizations in the United States
What are Considered for Tax Deductions?
Before the end of the tax year, you may file your tax return with records and receipts of charitable contributions made. This is just to justify the amount of your contributions, and you don’t need to file it together with your tax return form. Your charitable contributions can be eligible for tax deductibles, like publicly-traded securities, private securities, commodities, goods, building, real estate, cash, check, electronic money transfers, credit card charges, and other means of monetary donation. To qualify for a tax deduction, make sure you give charitable contributions to a qualified donee. The charitable institution can also give a receipt or statement in connection to a solicitation. If you made a charitable contribution through payroll, you need to furnish a copy of your W-2, pay stubs, a document from your employer stating the amount withheld for charity, and a pledge card that shows the name of the donee. If you donate more than $250, goods, or services, you will need an acknowledgment letter from the donee. To sum it up, keep all written documents which will prove your participation in charitable contributions.
Are there Limits to the Tax Deductibles on Charitable Contributions?
There is a reason why you must love your own country before others, and this also applies here. Your charitable contributions to foreign charities are not eligible for tax breaks. Normally, tax deductions are deducted up to 50 percent of the adjusted gross income of the donor. This applies to public charities and private foundations who distribute the charitable contributions they have received in two to twelve months time. For private foundations, a 30% limitation is applied. Household items should be considered in good condition for it to be considered as a tax deductible. This excludes antiques, art objects, jewelries, collectibles, or food. These items must be appraised.
Charitable contributions can be complex, and for those who wish to make anonymous donations, you can request anonymity in publicity, but not in written documents that you need to show to be eligible for tax deductions. In the end, the art of gift giving goes beyond monetary values and tax deductions.
RESOURCES:
IRS. “ Charitable Contribution Deductions (Publication 78, Part II). “ August 2009.
http://www.irs.gov/charities/charitable/article/0,,id=134331,00.html
IRS. “ Substantiating Charitable Contributions. “ June 2009.
http://www.irs.gov/charities/article/0,,id=96102,00.html
Stanford University. “ IRS Requirements for Tax Deductions on Charitable Donations. “
http://coweb.stanford.edu/staff/taxcompliance/res_jobaid/IRStax_charitable_donate.html#top
Smith, S.E. “ What are Charitable Contributions. “ 2003-2009. WiseGeek.com.
http://www.wisegeek.com/what-are-charitable-contributions.htm
