3 Tips to make your holiday donations pay off via @ebonymag
A lot of us give to charities, our places of worship, or other non-profit organizations during the holidays.While it probably makes you feel good to help the less fortunate, you should also know that your generosity can have financial perks too in the form of tax breaks
Here are 3 tips to make your holiday donations and year-end giving pay off when you file your next tax return with Uncle Sam
Donate to Eligible Groups Only – Not Individuals Even though your needy nephew in college, your cash-strapped cousin or your ailing grandmother might have true financial need, any money you give them during the holidays (or at other points during the year) isn’t tax deductible
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Sorry, but the IRS says that only donations to eligible organizations are tax deductible
You can use the Exempt Organization Select Check, a searchable online database available on IRS.gov, which lists organizations that are eligible to receive deductible contributions
There are some groups you won’t find there though. For instance, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database
You Must Itemize In order to take advantage of charitable deductions, you must itemize your deductions on Form 1040 Schedule A
Under federal tax law, charitable contributions can’t be claimed by anyone who chooses the standard deduction, including anyone who files a short form (i.e., Form 1040A or 1040EZ)
It’s also worth noting that you will only reap a tax savings if your total itemized deductions (including mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction
You can use the latest Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction
Maintain Proper Documentation Finally, you need records of your contributions to prove what you donated. The types of records depend on how much money you’re writing off on your taxes
For donations up to $250: You need a receipt showing the name of the charity, the date and location of your donation, and a description of what you’re giving away
You don’t need a receipt, however, if you’re donating clothes or other goods to an unmanned drop box
For write-offs of $250 to $500: For any donation over $250, make sure to get a receipt, plus a letter from the organization that states an estimate of your donation and if you received any goods or services in return
For donations of more than $500: For any donation of any value to be tax-deductible, the clothing or household items donated to charity generally must be in good used condition or better
But a clothing or household item for which you’re claiming a deduction of more than $500 doesn’t have to meet this standard as long as you include a qualified appraisal of the item with your returnEbony.com is an online magazine destination with insight on African-American culture, news and perspectives. Check out the site for more great content covering trends, advice, entertainment and more.