The tax system in the United States allows for a variety of different tax deductions for donations.
Taxpayers may deduct any funds that were spent on behalf of charitable
interests. From clothing to non-profits which provide grants, virtually
any government registered charity can qualify to receive donations that
are tax deductible. For small business taxes, consider the under-served
area of international charities, which receives only about 5 percent of
funds donated annually by Americans.
Itemize Tax Deductions
Itemize
charitable donations on your tax return in order to claim them. Retain
evidence that the donations were given to organizations that are
qualified. See IRS Publication 78 or call the IRS to find out if a
charitable organization is actually qualified and has 501(c)(3) status.
Use Schedule A, Itemized Deductions of Form 1040 to report qualified
donations.
IRS Donation Limits
Understand that the
cash contribution limit for donations is 50 percent of Adjusted Gross
Income (AGI). Non-cash items should be 30 percent of AGI. The
appreciated capital gains asset limit is 20 percent. If those amounts
are exceeded, the IRS allows for rolling over a portion of charitable
contributions to the next tax year for as long as 5 years.
Non-Cash Contributions
Read IRS Form 8283 about non-cash charitable deductions. Only
items in good condition or better may be deducted. Make an itemized
list of items donated for reference and include the fair market value.
If the donation totals less than $250, keep a receipt, though it is not
required. The IRS has gotten more stringent on charitable donations, so
the more documentation you retain, the better. Staple the receipt for
the donation to the list of items and keep it with your tax records for
that year.
Documentation
Keep good records of all donations. If
audited and no documentation exists, the claim is denied. For cash
donations, retain the bank statement, canceled check or credit card
statement that shows the amount, date and organization name. Keep other
receipts and letters that show the donation. For religious affiliations,
make a lump donation to get a receipt, rather than giving cash, so that
you have evidence of the donation.