Are thoughts of charitable contributions dancing in your head this holiday season?
If you itemize, you may also be thinking of tax deductions. Here are tips to make the most of your generosity.
- Choose a qualified charity. To be eligible for a deduction, the organization you contribute to must be qualified. In general, that means charities established for religious, charitable, scientific, literary, or educational purposes. For example, nonprofit hospitals and volunteer fire departments are qualified organizations, while your homeowner’s association generally is not.
- Decide what to give. You can donate cash (including checks and charges to your credit cards), stocks, and other financial assets. Noncash contributions such as vehicles, real estate, or artwork are also deductible.
- Keep records. When you make cash contributions of any amount, a bank record, pay stub, or written acknowledgement from the charity is required to support your tax deduction. If you donate via text message, keep a copy of your phone bill showing the amount you gave, the organization you gave it to, and the date of your donation.
The greater your contribution, the more paperwork you need. As an example, for noncash donations over $500, you’ll need to file Form 8283, and for donations of $5,000 and up, a qualified appraisal is required.
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