Taxes can bring out the worst in anyone. Is your sugar low and pressure mounting high because of that tax bill? Deductions might not totally relieve you off your obligations, but reduce it to considerable amounts. Despite the changing economic dimensions, taxes seem to be a constant. Tax professionals at Brian Walsh in NJ know how to balance the tax stress out of your life. You already have enough bills to cater for; you do not need a huge tax bill to nudge with. Acts of kindness are rewarded after all. Donating to charity reduces your tax deductions. Nevertheless, you should not prescribe to giving to charity for the purposes of claiming deductions though it is totally allowed.
What are charitable deductions?
What does your giving scale read? You can claim deductions on your taxes if you make contributions to charitable organizations that are IRS-qualified. Non-charitable organizations are also known as non-profitable institutions. Consider the following factors before tossing the coin:
Timing
It’s a bold step already giving to charity, but timing is everything. One should ensure that these donations are made by the end of the tax year whose deduction you are eager to claim. Without itemizing your contributions, you do not stand a chance of gaining any exemptions.
Is it a valid non-profit organization?
Do not donate your goodwill to scams then cause a scene at the tax office as to why you are not getting any relief. Always remember to inquire about the organization you are making your donations to. Ask for the tax status of the non-profit. Check out on the database for exempted organizations. This information is also available on the IRS database. Organizations that are charitable might not basically read charity. Some of the non-profits are:
Religious bodies such as churches and any other religious organizations
Some educational bodies are tax exempt
Tax exempted hospitals and or any other medical research bodies
Units such as government, state or political divisions
Most organizations supported politically
Private foundations especially the ones that collect contributions and distribute to public charities
Private foundations that distribute donations to a common fund
Above and below the line
There is no limit in giving however IRS does not subscribe to the same. Donors making contributions to public charities are entitled to 50% of their gross adjusted income. You can only claim half on your income and not the whole amount. Still, you can carry-forward your claim to the next year. Fortunately, you have up to five years carry-forwards to assert.
Some gifts however, receive some special treatment of 20% to 30% especially when donations are made to private charities.
Money is not everything
Unlike common assumptions that you can deposit money into charities' accounts, you can give goods to charity too. Household goods and properties are still viable as donations. There are no deductions made on most household equipments unless the goods are in good condition. Make sure whatever goods you give are totally in good shape to gain optimally. You should have receipts, invoices and credit cards that contain the fair market value of your gifts. Get a receipt regardless of the donation you make. Receipts are required for any gifts over $250 and in some cases appraisals might be necessary. Receipts are not necessary but might be needed for future use incase IRS needs clarity of the contributions you made. Before making any donations, see to it that the items you are giving are good for your taxes.
Type of property
You are not limited to the type of donations you make. Money is such a lucrative contribution when made in any situation. However, giving your property could save your taxes big time. Donate appreciating property such as real estate, art, jewelry and antiques.
When the donation has stayed in your possession for over a year, deduct the full fair market value and evade the appreciation income tax. Clearly, keeping the property for up to year is truly beneficial. If property has been owned for less than a year, deductions are only made on the buying price.
Benefits of the gift
There are some types of properties that need appraisal. The technicality that comes with deductions calls for an accountant. You will need to find a tax preparer that will clearly state out in black and white, these types of gifts and other complex issues of deduction. Donating a property that will end up being fully beneficial to the society and the organization as a whole, you might be necessitated to write off all the market value. Different properties might attract different deductions. When giving land over an art of work, you stand to benefit a full exemption of the market value since the land has more to offer than a piece of art.
Motor vehicles
Vehicles could be quite expensive but still go a long way in saving a life or balancing the economic circles. When donating a vehicle, you cannot really claim the whole amount. The tax deduction you can claim is only viable to the amount the car will attract at the auction. Sometimes, claiming the market value of the car your donated it permissible only and only if the car is put into use after the donation.
If you need further assistance or to contact me directly, please click the link below to view my profile and contact information.
