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How to Claim Tax Deductions for Donations

 

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.

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