How to Claim Tax Benefits
You can claim tax benefits for charitable donations on Schedule A. You will total your donations along with any other deductions, then enter the total on Form 1040. You cannot itemize deductions and claim the standard deduction at the same time.
Rules for Claiming Tax Benefits for Charitable Donations
The IRS imposes several rules for claiming tax benefits for charitable donations. You must actually donate cash or property. You must donate to a tax-exempt organization that meets the requirements of tax law. You must keep records that substantiate your donations.
Keeping Records of Your Donations
Your written records should include the name of the charity, the date of the donation, and the amount you contributed. Canceled checks, acknowledgment letters from charitable organizations, and appraisals of donated property can be used as evidence. You should keep bank and credit card statements that show the amount paid by debit or credit card.
Tips for Donating Non-Cash Contributions
You should be able to document the fair market value of the goods or property you donate, including vehicles, boats, and even airplanes. You should obtain written acknowledgment from the charity for this type of donation. You must fill out Form 8283 and include it with your tax return if the property is worth more than $500.
Limits on Tax Benefits for Charitable Donations
Generally, you can deduct contributions up to 60% of your adjusted gross income (AGI), depending on the type of charity and its tax-exempt status. You can deduct contributions valued at up to 20% of your AGI. For example, if your AGI is $50,000, the maximum tax benefit you can typically take for charitable donations is $30,000.
Charitable Donations That Cannot Be Tax-Deducted
Some contributions cannot be tax-deducted, including contributions made to political parties, campaign committees, or political action committees, money spent on bingo games or lottery-like raffles, contributions to for-profit schools, or contributions to foreign governments.
Frequently Asked Questions
What are qualified charitable contributions? And how much can charitable contributions be carried into future years?
Source: https://www.thebalancemoney.com/tax-deduction-for-charity-donations-3192983
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