Thinking of ways to receive deductions on your upcoming tax return? There are different methods, but many go the route of charitable contributions. Charitable contributions can be a simple way to help the donor, while also helping others in need.
What method should I use on my taxes? How much can I deduct?
Itemizing deductions is the only way to go if you want to deduct a charitable contribution to a qualified organization. If this is done, up to 50% of your adjusted gross income can be deducted. However, there are 20% and 30% limits in certain instances.
When should I make the contribution?
The contribution needs to be made before the conclusion of your tax year.
How much can I deduct on a tangible item?
When donating something other than money, the fair market value of the item can be deducted.
What is considered a qualified organization?
There are many organizations that are considered “qualified”. Here are the main requirements to know (if the organization doesn’t fit any of the descriptions below and you are wondering if it is qualified, see the end of the post for a phone number to call):
– A domestic fraternal society that functions under the lodge system, if the contribution is supposed to be used only for charitable purposes.
– Any religious organization
– An organization that is dedicated to war veterans
– An organization whose purpose is strictly charitable, educational, scientific, or dedicated to improving the lives of children or animals
I am claiming a deduction over $500, what do I do?
In the case of a deduction that is all noncash contributions and over $500, Form 8283 must be completed and attached to Form 1040. Section A must be filled out for noncash contributions that are claimed for a deduction of $5,000 or less. Section A is also used for contributions of a publicly traded security. Note: Section B of form 8283 must be completed for each item that is claimed for a deduction over $5,000.
I am claiming over $500,000 for a deduction on one item. What do I need to do?
Attach a qualified appraisal of the property to your tax return. This is done if the contribution is not cash, inventory, publicly traded securities, or intellectual property.
Have questions about the above information? Or maybe just about deductions overall? Call Lescault and Walderman at 866-496-2042 for assistance today.