Solutions to Make Better Decisions with Your Money

Donate to Charities to Decrease Taxable Income

How does donating affect my tax return?

Are you asking for a receipt and itemizing your donations when giving to charities?

You should be.

Beyond the personal satisfaction of donating to charitable organizations, there could also be income tax benefits for your kind gestures.

Generally, you can take a deduction for contributions of money or property that you make to a qualified organization, but there are limitations based on your adjusted gross income.

Itemize your deductions

In order to benefit from the donation for income tax purposes, you must file the Federal Form 1040 long form and itemize your deductions on Schedule A.

If the total of your itemized deductions (including the charitable contributions) are greater than the standard deduction for your particular filing status, your itemized deductions will decrease your taxable income and tax liability.

Common types of organizations that are considered qualified

  • Religious, charitable, educational, scientific, literary, and prevention of cruelty to children or animal organizations
  • War veterans’ organizations
  • Domestic fraternal societies, orders, and associations operating under the lodge system
  • Certain nonprofit cemetery companies or corporations

Keep records of your contributions

Regardless of the amount of your contribution, there are record keeping requirements if you claim these deductions (though you do not need to attach the records to your tax return).

Generally speaking, your records must include:

  • date of contribution
  • amount of contribution
  • the name of the charity

 Do you make end of the year donations to charities?

Image Source: jeremybrooks