Giving to charity can make you feel good, help a lot of other people get things that they need, and provide you with a great break on your taxes. With that in mind, it's very important that you know what you can deduct and what you can't.
You don't want to end up struggling with the IRS during an audit because you claimed something you shouldn't or didn't keep adequate records. The tax codes and laws are always changing, too, so you have to stay up with them - or hire someone who does. There are three cardinal rules to remember when it comes to charitable donations.
Those may sound like common sense issues, but you would be surprised as to how many people simply don't think about those types of things. They don't get a receipt, don't itemize it, or don't give to the right kinds of places. It's great that you gave a warm jacket and some cash to the homeless lady in front of the supermarket, because she needed those things, but you can't take a tax deduction for doing that.
There are a few other things that you should know about charitable contribution deduction rules for 2011, too, so you can make sure that you do things right. That way you'll get your deductions and, should you get audited, you won't have a problem proving that you actually gave what you say you gave.
That way you'll get the maximum benefit from helping other people and you won't have a problem with the IRS if you're contacted and asked to prove your charitable giving.
You don't want to end up struggling with the IRS during an audit because you claimed something you shouldn't or didn't keep adequate records. The tax codes and laws are always changing, too, so you have to stay up with them - or hire someone who does. There are three cardinal rules to remember when it comes to charitable donations.
- Donate only to a legitimate charity whose status as a charitable organization can be verified.
- Always get a receipt showing the value of the items.
- Itemize everything on the receipt, so you know (and can prove) exactly what you donated, specifically.
Those may sound like common sense issues, but you would be surprised as to how many people simply don't think about those types of things. They don't get a receipt, don't itemize it, or don't give to the right kinds of places. It's great that you gave a warm jacket and some cash to the homeless lady in front of the supermarket, because she needed those things, but you can't take a tax deduction for doing that.
There are a few other things that you should know about charitable contribution deduction rules for 2011, too, so you can make sure that you do things right. That way you'll get your deductions and, should you get audited, you won't have a problem proving that you actually gave what you say you gave.
- Give your time instead of your money. You can write off the mileage to and from volunteer activities, and you can also deduct anything that you need to buy for that volunteer work.
- Clean out your closet and your home instead of giving cash- you can even donate your older car to charities like Kars4Kids. That can really help you if you don't have a lot of money to give but you want to do something good. Just make sure the items you give are in good condition and someone else will find them usable. Charities don't want your trash, and you can't legally take a tax deduction for items that aren't in 'good used' condition or better.
- If you're a senior citizen, you can get extra breaks. You have to be at least 70 and 1/2, so if you're in that age group, be sure to ask your tax advisor about your options if you want to give large amounts to charity.
That way you'll get the maximum benefit from helping other people and you won't have a problem with the IRS if you're contacted and asked to prove your charitable giving.
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