Here are a few things you need to know when it comes to your taxes and your deductions:
Always make sure that you are donating to a reputable 501(3)© organization. This is an organization that has filed forms with the IRS to ensure that your donations are tax deductible.
If there is a local disaster and you want to help a particular family, then that is a wonderful thing, but know that you can’t deduct it. Another option would be to donate to a company like the American Cross, when they are specifically working with that disaster area.
It’s so much easier to do monthly drafts from your account for your church, or a special organization that is important to you. This way it’s easy to prove your expense if the IRS audits you. Also, make sure that every organization gives you a receipt in January!
If you are giving away good will type items, it’s important to go to the irs.gov website and pull up charitable values. The IRS has a list of what each item is worth. Because so many people abused the values of goodwill items in the past, it’s not unusual for the IRS to require you to back up your number. For this reason, if you move and have a significant amount of furniture and other items that you give away, I highly recommend taking some pictures for your records.
If you go to a charitable event and you receive a gift, a meal, or you are buying an auction item, you can ONLY take the amount that you paid above the value. So if you bought a basket of goodies, worth $100 and you paid $150 for that basket, only $50 of your contribution is deductible, because the person that donated the basket, gets to deduct the other $100!
If you donate a car you MUST go thru a reputable company that gives YOU the value of your car. This is a red flag so you want to make sure you use the right fair market value!
Giving is a wonderful thing, even if you don’t get the full deduction, but I hope this helps you to understand what you can and cannot deduct.
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