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By Transamerica / Nov 24, 2014

Lower Your Taxes with Charitable Donations

charitable_tax_deductions_blog

During the holidays, people tend to donate more of their time and money. According to the Center on Philanthropy, the average person makes 24% of their annual donations between Thanksgiving and New Year’s.1

Before you start writing out checks to your favorite charities, do your research. Charitable donations may be eligible for a tax deduction, allowing you to give back and lower your tax bill all at the same time. Follow the steps below to learn how. 

Itemize your tax deductions.

You can claim your charitable tax deduction on Form 1040, Schedule A. Add up all charitable contributions and deduct them in the “Gifts to Charity” section of the form. If you have any questions, consult with a tax professional.

Donate to qualified charity organizations.

You will only be able to reduce your tax bill with a charitable contribution if it is to a “qualified organization,” as defined in the IRS Publication 526.

What does this mean? To get a deduction, you can only donate to a qualified organization, not a specific individual, political organization or candidate. Your favorite charities probably qualify but remember to always double check.

Keep your receipts.

Without proper documentation or a receipt, you will be unable to claim a tax deduction for cash donations. Therefore, keep a record of everything, such as a bank record, payroll deduction record or letter from the organization containing the name of the organization, the date and amount of the contribution.

Fill out additional paperwork for larger charitable donations.

For all charitable contributions over $250 to a single charity, you will also need to provide written documentation stating whether or not goods or services were provided in exchange for the donation.

With the holidays fast approaching, people are thinking about giving back more than ever. Combine giving with a tax deduction, and you have no excuse not to donate this year!

1American Express Charitable Gift Survey, American Express and the Center on Philanthropy at Indiana University, November 2007.

Transamerica and its agents and representatives do not provide personal tax or legal advice. The information contained in this article is for informational purposes and should not be construed as legal or tax advice. For legal or tax advice concerning your situation, please consult with and rely on your attorney or professional tax advisor.

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