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Giving to charity should be done out of goodness, selflessness and the belief in helping others. Furthermore, one should know the information and tax benefits associated with charitable contributions. Below are some key facts to understand about charitable donations.

  • First and foremost, in order for a charitable contribution to be tax deductible, you must be donating to a qualified organization. The majority of organizations are tax deductible, however, foreign governments, charities, and select private institutions are not considered qualified.
  • In order to declare a tax deduction, your deductions must be itemized. To itemize deductions, you must complete and file your income taxes on a Form 1040. Additionally, all of your itemized deductions must be listed on Schedule A.
  • Always make sure itemizing will be of greater benefit to you as opposed to claiming the standard deduction. To determine whether or not you will itemize your filing status, you must verify whether the total sum of the deductions is greater than if you were to choose the standard deduction method.
  • There are certain discrepancies when it comes to the valuation of a donation. In most cases, you are limited to deduct only the amount you paid for a certain item. If you purchased a Lego set on sale for 20% off, you must deduct the sale price rather than fair market value.
  • The limit for an individual donation toward a public charity mustn’t exceed 50% of your adjusted gross income (AGI). However, certain organizations have different limitations on deductible contribution amounts. Donations in excess of a specific limit will be carried out over the next five years.
  • A vital rule that applies to non-cash donations is to always obtain a receipt and written documentation of the transaction! Savings cannot be written off without proof of the donation. What is deducted from the total amount of your donation will reflect your tax bracket. If you donate $2,000 worth of food, and you’re in the 25% tax bracket, you are subject to saving $500 with the proper documentation!