We are all familiar with the need for charitable giving. Often times, not-for-profit organizations host an annual telethon, churches raise money for a member in need, and shelters look to volunteers for support. The spirit of goodwill is obviously the most important factor in these situations, but it is also important to understand the financial implications of your charitable gifts. By understanding those, you may uncover added benefits for you as the donor as well as for the charities you choose.
To help you get started, let's take a look at the tax implications of charitable donations. In most cases, federal law lets you deduct the value of charitable contributions made during your lifetime if you itemize deductions. Therefore, your actual cost of giving equals the value of the property donated minus the tax savings. Keep in mind, however, that the tax law also establishes certain limits regarding charitable gift deductions. The amount you can deduct in any one year depends on the type of charity to which you donate, the type of property contributed and the way the charity uses the gift. In addition, you must itemize your deductions on your tax return in order to be able to take a charitable contribution deduction at all.
If you do itemize, then in order for your contributions to be deductible, the charity must be one of the qualified organizations, which are listed in IRS Publication 78. The law also distinguishes between public charities
Thursday
April 25th, 2024
11:02AM
