What You Need To Know About Charitable Contributions And Taxes
As tax season rolls into full swing, it’s important that you take the time to really make sure that you’re doing all you can to get the best return possible. For many, deductions will have a huge impact on your tax return and whether or not you can get a refund, and one thing to think about will be charitable contributions that you’ve made over the year.
Charitable contributions are valid tax deductions, but you’ll still need to stay within the guidelines that the government has in place. Talking to your tax professional is the best way to ensure that you get the right results, but there are some basic points worth understanding upfront. Here are some of the main things to keep in mind and understand regarding charitable contributions and your taxes.
• Qualified Charities – The first thing to understand is that not all charitable contributions are actually qualified for tax deduction status. Gifts given to individuals or political organizations, for example, aren’t deductible. If you’re unsure, your tax pro can tell you if a deduction is valid. Or, you can use the IRS website to review organizations that qualify as deductions.
• Receipts – Any donations in excess of $250 will require a receipt from the charity in order to be claimed on taxes. You’ll need a receipt that shows the amount of the donation, descriptions of any property given, and what kind of goods or services were exchanged for the donation, if any.
• Reciprocal Donations – In some cases, a donation may be made and something could be received in exchange for the donation. In these cases, you’ll have to subtract the market value of the item or service received in exchange from the value of the donation. This is the applicable deduction you can claim.
• Property Donations – If you donate property or goods instead of cash, you will be allowed to deduct the market value of the donated item or property and no more. All donated items must also be in good working condition. It’s important to note that additional rules could apply to donations of items like cars or boats.
All in all, a charitable donation can be a very valid tax deduction. But in order to ensure that you get the right deduction, you’ll need to make sure you’re making a proper claim. Our team can help. Contact Sherbetjian Premium Tax Services today to review your taxes and ensure you’re getting the right deductions throughout your return, including for donations to charity.