TAX DAY BE DAMNED: GIVE OR IT SHALL BE TAKEN
Tax day just passed and you may have made a commitment that you will make better tax decisions for 2016; just like you promised for 2015. The time has come to introduce this resolution to your inner humanitarian, as you can make donations to a good cause, while reducing your tax liability. This year, be sure to find an organization that is qualified by the IRS, so you can make an itemized deduction on your tax return. Use the following tips to ensure that you can receive a deduction for your charitable donation.
1. Itemized Deduction: First of all, you cannot make a qualified charitable deduction under the “standard deduction,” as they can only be reported through itemized deductions.
2. Determine whether your donation is qualified for a deduction: To receive a deduction for your donation, it must be made to a “qualified organization.” The “Exempt Organizations Select Check” is an online tool provided by the IRS to help you determine whether your donation was made to a qualified organization. If you don’t want to do the research, you can always count on larger charitable organizations like Red Cross.
3. Keep a record: When you make a charitable donation to a qualified organization, you must maintain a record in the form of a bank record or a written communication from the qualified organization containing name of the organization, the date and amount of the contribution. If your contribution has a value of $250 or more, you must get a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash, a description of any property contributed, and whether your received a benefit in return (if so, it must include the estimated value of the benefit received).
4. Submit a Form 8283: If your charitable donation deductions exceed $500, you must submit a Form 8283 with your return. It’s a Wild World, are you protected?