People contributing to the best charities to donate to in Chicago are making their gifts count. As a whole, Americans give over 300 billion to charities each year, roughly 2 percent of the gross domestic product (GDP). There are many Americans who donate to charities, corporations do as well. As an individual, making a charitable donation is an excellent way to reduce your tax burden. Tax benefits are one of the most compelling reasons for making contributions. But a tax break isn’t always a guarantee, no matter how generous you have been feeling lately. Here are a few tips for those individuals who desire to make donations to their favorite charities.
Itemize– In order to claim any sort of donation on your tax returns, you need to itemize your deductions. You must report all itemized deductions on Schedule A of your Federal 1040 forms.
Choose Wisely– You need to choose a qualified organization to donate to. If you doubt the qualifications of the charity, you can ask to see their letter from the IRS. Many charitable organizations will actually post this information for all to see on their website. If this is getting you nowhere, you can do an online search for IRS exempt organizations. But keep in mind that not all organizations will be on this list. Many religious organizations like churches and temples are eligible to receive donations even if they are not on the list.
Get That Receipt– Cash deductions, regardless for how much, must be substantiated by a bank record or in writing from the organization you donated money. These receipts need to include all pertinent details including dates, amounts and the name of the charity or organization that received your donation. Canceled checks and credit card receipts are acceptable only if they clearly contain all the needed information.
Payroll Deductions– There are many people who donate to charities and other organizations through their employer. If you are making contributions that are deducted from your payroll, then you need to keep your paystubs. There are also other forms of you can utilize for recordkeeping, check with your employer for examples.
Value of Donation– Sometimes, you are given a gift when you make a donation. For example, you might receive a coffee mug or t-shirt when you give to an organization. Are far as taxes are concerned, you can only write off the value of your donation. That is, you must first deduct the value of the item received. If you are not sure of the value of the gift, just ask the organization.
Your Time is of No Monetary Value– When you volunteer your services, you cannot take any deductions. However, if there are expenses involved while you are volunteering, these expenses can be deducted, unless the expenses were reimbursed. Some examples of expenses while volunteering include travel expenses like parking fees and tolls, special clothing used for volunteering and any supplies you may have used during your time volunteering.
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