Charitable Contributions

Happy Thanksgiving! This is the time of year to be thankful, and, for some of us, this time of year has us thinking of giving back, making charitable contributions. Charitable contributions to those of your choosing are obviously very important, but it’s also important that you make those contributions in a way that also benefits your taxes. For those of you who don’t know, charitable contributions can be assessed as deductions on your tax bill! Giving is important and the government recognizes your charitable donations as a private citizen, but, it does impress upon you a few stipulations to receive the deduction on your taxes.

First, the charitable contribution needs to be to a qualified organization. You cannot deduct donations made to individuals or to political campaigns. Also, many contributions to organizations are met with gifts from said organization: consider an outdoor organization at who’s benefit dinner you wind up winning some grand prize because of your donation: the amount you can deduct from your taxes may only be the balance between the fair market value of the gift given to you by the organization and the amount of that year’s donation. If the fair market value of the gift exceeds the donation, then you’re out of luck at tax time. Also, to deduct the contribution you made, you must keep the receipt of the payment you made. The IRS doesn’t want to see a hand written sheet from So-And-So, claiming that you paid them some money; it wants to see receipts, receipts which, if needed, can be tracked back to a source. Non-cash donations are also considered contributions which can be written off, however, in order to claim the contribution on your taxes, for a contribution totaling over five hundred dollars, you must complete a separate IRS form, IRS form 8283, and, if you have trouble understanding the form, Practical Taxes is ready to help.