How Charitable Tax Deductions Work

If you itemize your deductions, you can include qualifying charitable donations, including nonmonetary donations.

Up Next

Charitable tax deductions are the IRS's way of rewarding you for making donations to organizations that help people in need. For every contribution you make (cash or otherwise) to a qualified charity, you can shave a little (or a lot) off your adjusted gross income and reduce your own tax burden.

Charitable contributions can take many forms. Cash, check and credit card donations are the most straightforward type of donation -- they're easy write-offs. But you can also donate property, goods, real estate, your time and services, stock options, intellectual property and just about anything else you can think of. This is where things take a turn into more complicated territory. Some of it will be fully deductible, some partially, some not

deductible at all. The answers are all to be found in the IRS publications on charitable deductions, but you might need some time (or professional help) to find them.

Whatever you do, if you've made charitable contributions over the year, you must take the itemized deduction option and fill out Schedule A on your federal Form 1040. If you take the standard deduction you won't get the full benefit of your donations.

This article won't get into the nitty-gritty details of the IRS's exhaustive rules on this subject -- if you're a whaling captain, for example, you'll want to look elsewhere for an explanation of the charitable deductions you can take for subsistence bowhead whale hunting activities. But we will give you the basics and some tips on how to make the most of your charitable giving at tax time.

Source: money.howstuffworks.com

Category: Taxes

Similar articles: