Benefits of Making Donations

Charitable giving is a great way to help non profit organizations and, at the same time, help your finances. A qualified donation is tax deductible. When you donate to a non profit organization, you must make sure that it is a qualified organization so that the amount you give will be tax deductible which will help you lower your income tax obligation to the IRS. By lowering your taxable income, you will owe the IRS less and save more money. The more taxes you can save, the more money you will have to put in your savings account to use for any other purposes.

The problem is that charitable giving is not without risk. Your donations are an investment in your community, the nation, and the world. It is wise to be cautious when making your donation decisions so you may be able to avoid scam artists who try to make money by taking advantage of your generosity. You need to be aware of non profit organizations that spring up overnight in connection with current events or natural disasters. They often will make a compelling case for your money, but as a practical matter, they usually don’t have the infrastructure to get the donations to actually help the affected areas or people. Therefore, before you give away your money, you need to ensure that the non profit organization you are going to help is legitimate.

When you make a donation of any size, you should try to claim the tax deductions. The tax benefit for donations is available for taxpayers who itemize deductions. The IRS says that about one-third of all tax filers itemize. Those who take a standard deduction receive no added tax benefit for their contributions. The IRS reminds taxpayers to keep appropriate records to prove the value of their gifts. For example, for any single gift of $250 or more, a taxpayer must have a written acknowledgment from the non-profit organization by the earlier of the date the person files the tax return or the filing deadline, including extensions. A person donating property valued at more than $5,000 must have a qualified written appraisal. For more information on how to claim tax deductions properly, you can refer to the charitable giving answer book.