Charitable Tax Deductions are Easy and Rewarding

People who give to charity do so freely, without a tinge of "what's in it for me". But even the most earnest philanthropists will agree that a tax break can make the good feeling you get from giving, even better.

When you donate to your favorite charity, make sure to let the tax agency know. Charitable tax deductions are readily and legitimately available to you. Your contributions to charitable organizations can add up to a sizeable deduction when you itemize them on IRS Form 1040, Schedule A.

Donating to charity is easy to do, but it does carry certain risks. The tax agencies will only grant tax deductions for contributions made to recognized organizations. Check to see if the organization is recognized by the tax agency before you make your donation. Look for the IRS Publication 78 for a full list of recognized charitable organizations. You can find this list at your local library, and it's also available online. Take the time to research, and be sure that your money is truly going to a worthy cause.

Tax benefits are not available on donations made to individuals, political leaders or political organizations. Further, you cannot claim a tax break for time spent raising money for organizations by holding raffles, bingo or any other games of chance.

You don't necessarily have to give cash to get a tax break. Deductions may be available for contributions of merchandise, goods or services. The amount of the tax break is based on the market value of the merchandise, goods or services donated. In other words, if your business donates a product valued at $200 to a local charity, you can claim a $200 tax deduction, provided that it is a charitable organization recognized by the tax agency. It's also possible to receive a tax deduction for your donation of company stocks. The value of the stocks is based on the average high and low values on the date of valuation of the gifted stocks.

You may also receive a tax break by donating a vehicle. The amount of the deduction will be based on the vehicle's resale value at the time of donation. This is also true of planes and boats donated to charity. However, if the claimed value of the donated boat, plane or motor vehicle exceeds $500, and the item is sold by the charitable organization, the tax break is limited to the gross proceeds from the sale.

Household and personal items that are donated may also qualify for a tax deduction. The value of the item is based on the amount that the item would cost at a second-hand shop or garage sale. Be sure to get a proper receipt from the charitable organization that states the value of your donation. This is a requirement for any charitable contribution valued at over $250.

Only contributions made during the tax year will qualify for a deduction. If you have used a credit card or issued a check, it does not matter what date the transaction shows on your account. You can claim the deduction only in the tax year that you made the donation.

Even if you don't expect to get anything in return for your goodwill, go ahead and keep a list of your charitable donations. The taxman will appreciate and reward your generosity.

Article Source: http://www.gestbiz.com/articles

Angelina Pyrkins is a writer for several popular Internet magazines, on home equity and family matter themes.
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