Charitable donations and taxes

Navigating Charitable Donations on Taxes

While the concept of giving is to benefit others, the good deed of putting those before yourself can also have personal benefits. When it comes to taxes, it’s often overlooked that certain charitable donations you make throughout the year can be applied to your deductions and possibly save you money on your tax returns. While it seems simple, it’s best to understand the basics when it comes to deducting donations to ensure there are no mistakes or confusion in the process.

Overview of charitable deductions on taxes:
If you make a donation to an approved organization, you can deduct those charitable amounts on your tax forms. This means that any approved charitable deductions will lessen the amount you may owe in taxes for that year. In most circumstances, the IRS allows taxpayers to write off certain charitable contributions up to 50 percent of their adjusted gross income. There are rules to deducting donations, however, so it’s best to check the IRS website or with your tax advisor for any specifications and rules that may affect your filing process.

Things to remember when claiming charitable deductions:
• Check the IRS website to make sure the charity you donate to is a legally registered 501(c)(3) Certified Charity to have the donations qualify as a deduction.
• You can only claim charitable deductions on your tax returns if you itemize deductions.
• Charitable donations are claimed on Schedule A (Form 1040).
• Donations by check will not count if they are dated for the following year.
• If you received any incentives from donating (e.g., you donate money at an event in exchange for a free meal), then the IRS requires you to subtract the cost of the incentive from the amount you are planning to claim.
• Keep track of all receipts, documents, and proof of donations, as they are required to perform the charitable deductions on your tax forms.

What counts as a charitable contribution?
YES
• Donations to religious organizations
• Volunteer expenses
• Donations to local, state, and federal governments
• Donations to non=profit schools and hospitals
• Payroll deductions to charities through your employer
• Donations to veteran groups
NO
• Gifts to individuals
• Donations to political groups and individuals
• Donations to for-profit schools and hospitals
• Donations to labor unions
• Donations to foreign organizations and governments
• Donations to social/sports clubs

If you are someone who frequently donates but was unaware of the tax benefits, or you are unsure of how to figure out the paperwork and requirements necessary to deduct charitable donations, then it’s best to speak with a tax advisor. The team at Emerald Financial Partners can assist you in navigating the process of filing taxes with donations. Contact them today to get a head start!

Disclaimer: These are general guidelines, not set guidance or advice. Each business and personal situation is different and may require customized assistance based on their circumstances. Please consult Emerald Financial Partners about your specific needs.