3 FAQs Regarding Charitable Donations And Taxes
Donating to a charity you support can be a rewarding feeling, but there is an added benefit: tax breaks. In many cases, when you donate to a charity, you can deduct some of the amount on your taxes for that year. If you have made some donations, check out these three frequently asked questions regarding donations and taxes.
Do You Need to Submit Proof of the Donation?
For extremely small donations, you likely won't include any proof of your donation with your taxes; however, you should keep all proof of any donations in the event you are audited. If the donated amount is under $250, you don't need much. The name of the organization, date, amount and bank records (or a written receipt for cash) that prove the amount was given. For donations over $250, you need a little more documentation. You'll need everything you need for smaller donations, plus a statement from the organization that states you didn't receive anything in exchange for the donation.
What About Non-Cash Donations?
Not all donations are cash or checks. Some are physical items, such as cars, houses, clothing, etc. You can still write off these types of donations as long as they were donated to qualifying charities. You'll still want proof, but you'll also need an itemized list if you donated a lot of items. For example, if you donated a bunch of old clothes to the church, you should make a list of all the items and their worth. Usually, if a non-cash item is used for the donation, the IRS does not consider the purchase price. They consider the current market value.
How Much Can You Deduct?
In most cases, you can deduct all the qualifying charitable donations you make because, while there is a limit, it is relatively high for most Americans. Typically, you can deduct up to 50 percent of your adjusted gross income in charitable contributions. Unless you are rich, you probably can't afford to donate half your income. Therefore, you should be able to get back every cent you donate.
Charitable incomes are a great way to support something in which you believe, such as a church, health foundation or any other cause. Plus, for most Americans, the entire amount can be deducted from the year's taxes. If you are ready to start donating money, so you can help others and get some nice tax breaks, get started today by researching charities you want to see succeed. To learn more, contact a foundation like Jonathon Gray Family Foundation.