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Charitable Contribution Tax Deduction part2

Charitable Contribution Tax Deduction part2

Charitable contributions of money are always a hot topics. Everyone wants to know how to get the deduction for cash. Just remember that charitable contributions are deductible only if you itemize deductions. To be deductible, charitable contributions must be made to qualified organizations. Payments to individuals are never deductible.

Monetary Donations

What may surprise most people is that you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Huh? Yes for a monetary donation this is imperative. Without it, if you are audited your tax deduction may be disregarded by the IRS. To prove you deduction you need to supply bank records. These bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

Choose the right organization

In order for your donation to be deductible, it must go to a nonprofit group that is approved by the IRS. Most often, these are charitable, religious or educational organizations, though they can also be everything from your local volunteer fire company to a group for the prevention of cruelty to animals. Just remember that just because someone says they are a member of a charity does not necessarily mean that your donation is deductible. Verbal assurances from the charity is also not enough to prove your charitable deduction if you are ever audited by the IRS.

If you’re not sure whether the group you want to help is approved by the IRS to receive tax-deductible donations. This site allows you to enter the name and location of an organization and find out instantly if it qualifies.

If you missed part one to this post see it here at Charitable Contribution Tax Deduction


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