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Tis the season for charitable donations…and tax breaks?

Ringing bells and shiny red buckets are just one of the many opportunities that may result in an increase in charitable donations over the holidays. Monetary contributions to charities can lead to more than just a warm heart, if done wisely they can also lead to a tax break.

Charitable donations and taxes: Three tips

These donations are often deductible on federal income tax returns. Follow these tips to help better ensure you can take advantage of the deduction:

 

  • Itemize. The deduction is generally not available for those who choose the standardized deduction. In general, a taxpayer must use Tax Form 1040 Schedule A to claim a charitable contribution deduction.
  • Choose wisely. The Internal Revenue Service (IRS) notes that approval for the deduction often hinges on the organization as only eligible organizations qualify. Some examples listed by the agency include churches, veteran’s organizations, schools, Goodwill Industries and even some amateur sports organizations. The agency has a tool that helps you look up any organization in question to ensure it qualifies.
  • Keep records. Get a written record of the donation. This will serve as evidence to support the claimed deduction in the event of an audit. In many cases, a note from the organization may suffice.

Even with records of the donations, notification of an audit can result in concern, as it should. An audit by the IRS is a serious matter. It is important that those who are contacted know that options are available to fight the accusations of improper tax returns. In many cases it is wise to seek legal counsel before responding to contact from the IRS. An attorney experienced in tailoring legal strategies to these matters can help to better ensure a more favorable outcome.

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Law Offices of Robert T. Leonard, APC

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Toll Free: 888-408-9486
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