No one likes to owe the IRS a big tax bill at the end of the year. You may want to use every avenue available to you to reduce the debt you will owe next tax season and also do some good with your money. Your simplest option could be to give cash and assets like clothing or household goods to public charities in your city or state. However, you may not know what ones are truly worth the time and money that you will give to them. You could save yourself hassle and the dilemma of not getting a deduction by using some simple criteria to gauge their worthiness.
To qualify for this type of exemption as a donor, you are limited to giving money or assets to groups that have a 501 (c) (3) license. This license can only be obtained from the IRS. It requires the group to file documents and provide proof of their legitimacy before the IRS will extend this licensing to them. It also means that the group can give credit to people who donate money or assets to it.
If you give money or physical assets to the organization without asking for proof of the license, you risk not being able to claim the exemption on your tax return. When you add it to your return, you more than likely will be denied the credit, and the IRS may audit you. You will then have to explain that you made a donation to an organization that was not 501 (c) (3) licensed.
If it does have the licensing, it can give you a receipt of your donation, which you can then use to claim the deduction on the return. The receipt will tell you how much you donated, what the value of the asset was, on what date you made the contribution, and to what organization it was made. The IRS might ask that you turn in this document with the return.
Most organizations that want to solicit donations will make an effort to remain in good standing with the community. They might sponsor events, attend venues in the area, and advertise the need for contributions around the holiday season. Any organization that is reluctant to be a part of the community may not be worth your time or money.
Even so, you might simply want to make the process of donating as straightforward as possible. You may realize that the government allows tax-exempt status to most churches, temples, and other religious entities. You could contribute to your church, get proof of it at the end of the year, and claim the deduction without fear of an audit.
However, you still may be required to donate over the deduction amount, which is set at $500 in most cases. Businesses may have to give more to get the full credit. If you give less than that, the IRS may not allow you to get the credit.
Lowering your taxes might be your main priority as you get ready for the upcoming tax season. You do not want to owe the government a debt you cannot pay. To lower what you owe and also give much needed cash or assets, you could donate to charities that serve the public. It may be important for you to know what ones can offer you that deduction.
To qualify for this type of exemption as a donor, you are limited to giving money or assets to groups that have a 501 (c) (3) license. This license can only be obtained from the IRS. It requires the group to file documents and provide proof of their legitimacy before the IRS will extend this licensing to them. It also means that the group can give credit to people who donate money or assets to it.
If you give money or physical assets to the organization without asking for proof of the license, you risk not being able to claim the exemption on your tax return. When you add it to your return, you more than likely will be denied the credit, and the IRS may audit you. You will then have to explain that you made a donation to an organization that was not 501 (c) (3) licensed.
If it does have the licensing, it can give you a receipt of your donation, which you can then use to claim the deduction on the return. The receipt will tell you how much you donated, what the value of the asset was, on what date you made the contribution, and to what organization it was made. The IRS might ask that you turn in this document with the return.
Most organizations that want to solicit donations will make an effort to remain in good standing with the community. They might sponsor events, attend venues in the area, and advertise the need for contributions around the holiday season. Any organization that is reluctant to be a part of the community may not be worth your time or money.
Even so, you might simply want to make the process of donating as straightforward as possible. You may realize that the government allows tax-exempt status to most churches, temples, and other religious entities. You could contribute to your church, get proof of it at the end of the year, and claim the deduction without fear of an audit.
However, you still may be required to donate over the deduction amount, which is set at $500 in most cases. Businesses may have to give more to get the full credit. If you give less than that, the IRS may not allow you to get the credit.
Lowering your taxes might be your main priority as you get ready for the upcoming tax season. You do not want to owe the government a debt you cannot pay. To lower what you owe and also give much needed cash or assets, you could donate to charities that serve the public. It may be important for you to know what ones can offer you that deduction.
About the Author:
Find a summary of the reasons why you should support public charities and more info about great charity organizations at http://www.tableofplentyhmb.org/board-of-directors right now.
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