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Tax Planning for Your Charitable Giving

What tax deductions can I take for donating to charity?

With the recent rash of hurricanes and the horrific Las Vegas shooting, many of us are donating to charities in an effort to help those in need.  Charitable giving is wonderful no matter how or how much you give.  With a little planning, you can also ensure your charitable donations assist you by allowing you take qualifying tax deductions.  Our San Diego tax planning lawyers at Brunoro Law explore some facts you should know when making charitable donations.  

Give to a Qualified Charitable Organization

In order to take advantage of the potential tax benefits of giving, you will want to make sure your selected charity qualifies for tax deductions.  Your charity must be registered for the IRS to allow your deduction.  Most churches are registered, as are larger charitable organizations like the Red Cross.  Donations that will typically not be recognized for tax deduction purposes are those made to individuals, foreign governments, or foreign charities.  Research your potential organization before making a donation to ensure it is registered and trustworthy.  

Know the Limits for Charitable Donations

There are limits on how much you can deduct for charitable contributions, but these limits are quite high.  If you contribute over 20 percent of your adjusted gross income to charity, you will need to consult with a tax planning lawyer as you could exceed donation limits.  Giving to a public charity raises your limit, but there are numerous complex laws that your attorney can help you to navigate.

Be Prepared to Verify Your Donation

Your charitable contribution will usually be deductible in the year in which it is paid. It is important that you maintain proper documentation of your contributions so that you can verify your deduction.  If audited, the IRS will look for evidence of your contribution in the form of a canceled check, written acknowledgement from the charity, credit card statement, or bank statement.  If you contribute more than $250, you will need to prove to the IRS that you made the donation and did not receive anything in exchange, which can be done through a recipe from the charity that verifies the amount of your gift, the date, and that you did not receive goods or services in exchange.  Consult with your tax planning attorney for further assistance with taking a tax deduction for your charitable contributions

Posted in: Tax Planning

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