 | |  | Taxes and Giving Charitable giving is good for your soul and taxes. As the year draws to a close, you may be considering giving to charities. Don’t forget the tax advantages provided under law to encourage charitable giving.
Make sure to consult your tax advisor for specific advice about your tax-deductions. Here's a handy guide on taxes and charitable giving:
- Maintain records of your donations. Make sure you keep records and receipts of all your monetary and non-cash donations such as clothing, appliances, household items, furniture and automobiles, including the name of the organization, date and amount donated.
- Make sure the contribution is tax-deductible. Ask the organization if contributions are tax-deductible or check with the IRS. All 501(c) 3 organizations can accept contributions and offer donors a tax deduction to the full extent of the law.
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How to receive tax-deductions for charitable donations. To claim deductions, you’ll need to fill out the tax form 1040 (the long form, which allows you to itemize deductions on Schedule A). You can find it at the IRS Web site (www.IRS.gov). You will not receive any federal tax breaks if you fill out the short form or take standard deductions.
- What you need to know about non-cash donations. The Pension Protection Act passed in 2006 toughened the rules for non-cash donations to charities. Tax deductions are allowed only on donated items that are in good used condition or better. This helps eliminate the unnecessary expense charities will have to spend in trash removal of unusable donated items, money that would otherwise be spent on programs and services. Search for charities that accept donations of non-cash items such as clothing, appliances, household items, furniture and automobiles at the Charities Review Council's online searchable database.
- Charitable events. If you buy a ticket to attend a charitable event, you may be able to receive a deduction, but not for the entire price of the event. You can’t deduct the cost of services or goods you receive at the event, such as entertainment or food. The organization hosting the event should be able to identify the exact value of benefits you receive. After deducting that amount, the rest of the amount you paid for your ticket is deductible.
- Deductions for volunteering. Although you can’t deduct the value of time or services donated to an organization, you can deduct any costs that are incurred during volunteering, such as gas mileage or the cost of a volunteer uniform.
Additional detailed information is available at the IRS Web site.
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