Charitable donations are a great way to help lower your tax bill while helping others. However, it’s imperative that you know the basics of charitable donations to ensure you get a fair tax deduction for them. Here are a few guidelines to keep in mind when making a decision to contribute and how to compile them for your Denver tax planning service:
Verify the organization is a qualified
According to the IRS
, this means that an organization must be “Organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.” Keep in mind this does not include individuals, political parties, or organizations like sports leagues.
Keep records of your donations
To claim a deduction, you must have a bank record, receipt, or payroll deduction. If you are making a contribution of more than $250, make sure you have a written acknowledgement from the organization as well.
Understand the value of your contributions
When donating clothing or other items, the IRS states that the items must be in at least “good used condition.” The amount you get to deduct is the amount that it would sell for in a second hand store, not the amount you paid originally. Make sure to get a receipt from the organization when you make a donation and hang on to it until it’s time to file your taxes. The same goes for donating a car. You can only deduct the amount the organization sells the car’s parts for. However, if the organization uses the car as is, you can deduct the fair market value.
Making sure that you’re getting the best deductions for your contributions can be tricky, that’s why it’s important to rely on Denver tax resources for maximizing your return.