If you make donations to charitable organizations, you may be eligible to deduct the amount or monetary value of your contribution when you file your taxes. There are, however, a number of rules and regulations to consider. Read on to find out more!
Charitable Contributions and Itemized Deductions
You can only deduct charitable contributions on your taxes if you itemize your deductions. If you take the standard deduction, you can’t deduct other expenses as well. So, if you know that you’re going to take the standard deduction, it doesn’t make sense to track and report your charitable contributions.
Always Check Organization Status
If you do itemize your deductions and you want to deduct charitable contributions, you are responsible for making sure that any organizations you donate to are tax exempt. Most 501(c)(3) organizations are tax exempt. Many religious organizations are also tax exempt.
The IRS has tools online to help you look up an organization’s status. However, not every tax exempt organization is listed in their database, so it’s still up to you to make sure that any groups you donate to are, in fact, exempt from paying taxes.
Factor in the Nature of Your Donation
How much you can deduct on your taxes also has to do with the nature of your donation and what the organization does with it. If you donate a vehicle, for example, you are not able to deduct the full value of the vehicle if the organization ends up selling it for less. Other rules and regulations apply to various types of donations. Again, the onus is on you, the donee, to know the rules and make sure you accurately report your donations on your taxes.
For help navigating the waters around making and reporting charitable contributions, contact the team at Taxation Solutions, Inc. in Austin. Our tax professionals can help you understand and make informed decisions regarding donations and deductions.