Donation Tax Deduction

Coastal Business Services understands that the tax laws can be confusing to most taxpayers. While it would be ideal to just fill out a few yes or no questions and be done for the year, most taxpayers have special circumstances that can require a lot of paperwork and adds confusion. Instead of facing the tax season alone, contact one of our professionals to help you get the most out of your tax breaks, no matter your unique situation.

One tax break that many people forget about is the donation tax deduction. You worked really hard for your money and decided to be generous to a good cause. Whether you donated some unused items or gave a cash donation, we can help you fill out your tax return to lower your tax bill at the end of the year.

What Counts as a Charitable  Donation?

Almost anything that you donate to a charity can be counted as a charitable donation. This is a great way to help out others in need while also lowering your tax bill and cleaning out your home. Some people choose to donate clothing and other items they no longer use. Other times, the donation may be in the form of cash or check. Both of these can be claimed on your tax return.

While most items can be counted as charitable donations, you must make sure that they fall within your tax bracket. Unless a relative died during the tax year and donated all their money to charity upon death, it is not possible to claim 100 percent of your income for this deduction. Our professionals at Coastal Business Services can help you determine what counts as a charitable donation and how much you can claim based on your income and other special circumstances.

How to Claim the  Donation Tax Deduction?

To claim the donation tax deduction, you first need to have record of the donation. Receipts are often given after you give the donation. Keep these and provide them to your tax preparer to claim this deduction. In addition, you can file the deduction on Form 1040, Schedule A, but you must itemize your return in order to do this. Coastal Business Services can help if you have never itemized your tax return or if you need some help getting all the information properly put into the form.

Rules for Claiming This Deduction

Before you can deduct your charitable donation, there are a few criteria to meet. These criteria include:

• You must donate the property or cash. Pledging or promising a donation does not count. Once the donation is made, you can file it on the tax return for that year.
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• The donation must go to a tax-exempt organization. The organization will let you know what their tax status is. Organizations such as churches don’t need to get the forms from the IRS, but will count as tax-exempt organizations.
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• You need to itemize your tax return. If you aren’t allowed to itemize or choose not to do this on your return, you won’t be able to claim the donation.
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• You must be able to keep records of your donation. This is often the hardest part of the process. You should have forms such as appraisals for the donated property, acknowledgment letters, and canceled checks.
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Using the donation tax deduction can be a great way to save you money, but many taxpayers don’t understand the rules that go with this deduction. Finding a tax preparer, like us at Coastal Business Services, can help you get this deduction without all the hassle.

Keeping Records

One of the most important things you need to do when using the donation tax deduction is keep excellent records. The more proof you can bring in with your donation, the more likely the IRS will accept it and give you this deduction. In your records, you must have the name of the organization you donated to, the date that you made the contribution, and the amount that you contributed. This is why canceled checks are often the chosen method of recording since all of this information is readily available in one place. Bank statements with your credit or debit card can also work well.

In addition, many charitable organizations are able to provide a written letter of acknowledgement to their donors to help them with their record keeping. Keep this on hand in the case of an IRS audit to prove that you did indeed contribute to the organization.

If you provide donations to more than one charitable organization, you must have these records present for each group. It is not enough to keep record of one organization and then assume the others are covered. Never claim this deduction without the proper records in place.

Keeping all this information in order, and knowing what is allowed for charitable donation records can be a challenge. Our professionals at Coastal Business Services are here to make claiming the donation tax deduction easier. Bring in all of your records, as well as any other tax concern you may have, and we can help you get this deduction taken care of.

When you are looking for a tax preparer who can help you with all your tax needs, look no further than the experience of Dennis O’Brien from Coastal Business Services, LLC. Located in Farmingdale, NJ, O’Brien has been helping individuals and businesses get the tax breaks they need for years. Give us a call today at 732-996-0608 to get started on your taxes today!