The art of giving to a charity organization is encouraged and many taxpayers get involved. If you, as a taxpayer, give a gift in a given financial year which meets the standards set by the IRS, then you can claim a charitable tax deduction when filing your taxes. However, the process and rules governing it might sometimes be complicated and a sound knowledge on the deductibility of your gifts is necessary.
For you to qualify for charitable tax deductions, you are expected to list your deductions to see if you have enough deductions which are more than the standard deduction. The new Tax Cuts and Jobs Act have raised the standard a little bit. For instances, the married couple who are filing their tax jointly should get to $24,000 and additional $1250 if they are age above 65 years. Single individuals must reach a minimum of $12,000 plus $1550 for those who are above 65 years of age.
The charitable tax deduction is preserved in the new law and all taxpayers should take advantage of this if they make donations to charity organizations which are legit. If you are able to donate to such organizations until you can find the charitable tax advantage, then here are some of the things you need to know. You can enjoy the charitable tax deductions in a given year which you made a significant amount of donation in a less painful manner.
What Documentation is essential for deductions for charitable contributions?
First and foremost, for you to qualify for charitable deductions for a cash, check, or any other item of monetary value, you need to get a written document from the charity verifying that you indeed donated to them. That document must have a valid name of the charity organization and should also state with credibility the amount you donated. Charity organizations are required by law to issue confirmation letters for donations not less than $250. However, many of them acknowledge donations even if it is below the minimum amount by giving a receipt.
In any case that a receipt is not issued for any donation less than $250, a bank record or a canceled check can be used instead. Any donations made casually to a charity collection box is not deductible as there is lack of a receipt or a confirmation document issued.
If you get some services or goods in return for your donation, the charity is required to also state the amount of the good or service cost and the only amount above that in your donation is deductible. That should come out clearly in the confirmation document from the organization.
What if I donate through my mobile phone?
It happens more often than not in this currently digitalized world that many donations can be made through mobile phones. If that is the case with you, then you should bear in mind that the charity organization that you have donated to have no information about you. Therefore, they cannot receipt your contribution and to them, you remain anonymous. However, all is not lost. The charges remain in your phone bill and you can use that to claim the deduction. The phone bill should state the amount, date, and the name of the charity organization that you have donated to for it to be valid.
Is the pledge I made on a crowdfunding site tax deductible?
Many crowdfunding websites have been in place and many taxpayers give their contributions through such websites. The most famous one is the Kickstarter, which basically if for raising capital for business, project or a product. However, nonprofit is inclusive.
There are other crowdfunding websites which have both nonprofit campaigns and individuals who are involved in raising money for other people. Good examples include Crowdrise, Generosity by IndieGoGo, and GoFundMe.
Only the nonprofit individuals who send their donations to these sites are eligible for tax deductions.
All you need to do is to try and get a verification from such sites that are involved in raising funds. Bear in mind that there will be no charitable tax deductions if the donations were for a business, product, or an individual.