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Everyone loves to save money especially when it comes time to tax time. For many people saving money at tax time means less money in the government’s wallet. For this reason many people tend to make charity donations. Charity donations can be claimed as a deduction on your taxes and therefore mean less money that you owe or that the government might actually pay you back for it. However, there are certain rules that must be followed in order to claim those charity donations on your taxes.
First the donations have to actually be made already. This means that you cannot call up a charity and promise to give X amount of money, you have to have already written the check and the charity must have it in their hands. The charity must also be an IRS approved charity. Most charities that are approved achieve a 501(c)(3) tax exempt status. Some charities are not required to get this tax exempt status so make sure that the charity that you are donating to is IRS approved or has a 501(c)(3) status so that you can claim the deduction on your taxes.
After the charity has received your donation of money or items you will receive a tax deduction letter. This letter will usually state that you donated X amount of money to the charity and will list the date that the donation was made. It is very important to save this paper as it is record of your donation and will need to be kept on record should the IRS question the deduction.
The next step of the tax deduction is the hard part. Charity deductions can only be made on tax forms that are itemized. That means there is no way that you can use the easy tax form come tax time.
While giving a donation might feel good, it makes it feel a lot better when you are able to save money at the same time.
