Donate Money to Charity: Tax Deductions
Many people wonder about the reasons to donate money to charity. Monetary and household donations can help a charity continue providing important services, and provide the donator a valuable tax deduction.
Benefits of Donating Household Donations
Garage sales and selling items at online auction sites take time. Donating household goods to charity is quick, easy and you get a tax break.
Household items, such as furniture, electronics and furnishings (and virtually anything else) can be donated to local charities. The charities will provide you with a receipt; make sure to keep it. If the IRS decides to audit your tax return, you’ll need to prove the contribution was actually made.
Expensive items with a value of $500 or more will need additional documentation, according to the IRS. An appraisal of the item will need to be on file to prove the donated value is correct.
Benefits of Giving Monetary Donations
Making a small contribution monthly to your favorite charity adds up over the year. These contributions drive down your tax responsibility, while supporting an organization that needs financial support.
According to the IRS, monetary donations must be backed up with proper documentation. Previously, the IRS allowed personal bank registrars or notes as support for donations. As of December 2006, these types of documents aren’t acceptable anymore.
A receipt from the organization, including the amount contributed and the date of the contributions will need to be kept on file. Also, be prepared to have bank records or credit card statements in case the IRS has any questions about the contributions.
Where to Donate Funds
Many people donate to causes that have personally affected their lives. For example, a donation to the American Cancer Society in a loved one’s name is a great way to get the tax benefits and give back to an organization that may have helped family members through a difficult time. The IRS has a list of charities that qualify for tax deductions at their website.
If you aren’t familiar with a charity, always check it out with the IRS before making a donation. This will ensure you receive the tax deduction and the organization is legit.