If you are used to make charity donations, then it’s time to reap the fruits of your good deeds.
Did you know that charity is one of the best tax opportunities for most taxpayers? That’s because you can easily combine two quite beneficial processes: making donations and enjoying tax benefits from them. The main idea is that you can deduct these contributions on your tax returns. This way, you are provided with an opportunity to deduct both cash and property contributions to charitable organizations.
However, before taking the advantages provided by this type of tax deduction, there are several important aspects that you have to figure out. Today, Prestige Auditors are going to tell you everything concerning charitable deductions from scratch; so, you can be sure that you are doing everything in accordance with the IRS’s main requirements.
First of all, you should know that the tax treatment of your charitable contribution can differ depending on crucial factors like the type of contribution and the tax-exempt status of the recipient organization. Plus, rules can vary for individual corporate donors and businesses.
Recently, the IRS has started to allow making charitable donations in cash, which means that from now on, you can also deduct donations in cash.
Which Donations Qualify for Deductions?
One of the first things that you should keep in mind is that not every donation is qualified for deduction. For example, there are several requirements set in place to ensure that contributions made by a person have a charitable purpose. Which means that a recipient has to qualify for tax exempt status, among them are: literary, religious, charitable, prevention of violence against children or animals, scientific or educational organizations.
If you want to make sure whether an organization is allowed to receive a charitable contribution, you can visit the IRS’s official website where you can easily check an organization’s tax-exempt status.
If you are concerned about the condition of parks or other parts of your state, you can also donate to a federal or local government.
It is also wise to mention, that there are several changes in the CARES Act. For example, according to this act, from now on tax payers are allowed to take up to $300 in charitable donations made in cash. Keep in mind that even if you decide to take the standard deduction, you are allowed to claim up to 300$ in donations for 2020 when it comes to filing your taxes in 2021. If you always confuse tax deduction with tax credit, we suggest that you read this blog.
Before claiming a deduction, you should strictly understand that there are several requirements that every taxpayer should be aware of. It will help you a lot in getting all the possible benefits. First of all, you have to file the IRS Form 1040.
What About Donations of Goods?
Along with donations in cash, every American is also allowed to donate items such as clothes, household items, grocery and lots of other materials. But, keep in mind that these types of donations have completely different rules. First of all, they have to be in usable conditions. Here are also several useful tips which will help you when it comes to donations:
- Always itemize your deductions
- Choose the right charitable organizations
- Donations for Individuals are not qualified as deductions
- Always get a receipt
There are also lots of vital aspects that you have to consider before making donations. Therefore, we recommend that you consult with professional tax experts in order to make sure that you are doing everything by the book. You can always contact Prestige Auditors’ team and we will gladly help you with any tax issues.. By working with our team, you can be 100% sure that we will choose all the possible tax deductions that you are eligible for. Plus, we will ensure that you file your taxes in time, hence avoiding any issues with the IRS. Let us do all the boring paperwork, so you can concentrate on other parts of your business. Visit our website where you can find the list of services provided by Prestige Auditors, and lots of blogs which will help you be more informed about taxes.