Tax break tips for Non-profit donations.
Giving to Non-profits? Here are some quick tax break tips.
Americans gave more than $307.75 billion to their favorite causes despite the economic conditions in 2009. By 2050, an estimated $41 trillion will transfer from one generation to the next, with gifts to nonprofit organizations projected to exceed $6 trillion. That much money can mean big time tax breaks for the general public if you know how to file them correctly.
Tax deductions are a significant bonus for many people that donate money to various worthy causes. The IRS understands that many organizations that offer valuable services could not operate without a considerable portion of their budgets being funded privately. In order to encourage people to continue helping these organizations do their jobs within their communities, the IRS offers tax breaks to reward the contributors.
Make sure the charity is registered.
The main requirement is that the charity must be registered as a 501(c) organization. This means that it is a non-profit entity. So what if you’re not sure a charity is registered as a 501(c) organization? Place a quick call to the IRS Customer Account Services division for Tax Exempt and Government Entities with the charity’s name and address they will verify the status for you.
The number is toll free: (877) 829-5500
There is also new section of the IRS website where you can search through their database for approved organizations: http://www.irs.gov/app/pub-78/
Subtracting the correct amount:
Once you’ve got this verification, you can offer money and take the deductions for the donations. Also, any donations over $250 must be documented with a receipt showing the transaction to the charity. Your records must indicate the name of the charitable organization, the date of your contribution, and the amount your contribution. Remember to always deduct the Crowdtilt 5.5% operating fee when making a contribution to a non-profit campaign. (Claim the amount you typed in, not how much you were actually charged.)
Also, keep in mind that if a person received anything in return for a donation, such as a service, merchandise, or admission tickets to a musical or sporting event, that person can deduct only the amount of the donation that exceeds the value of the gift. For example, if someone gives $100 to the local PBS station and they give a $20 DVD of a Stevie Ray Vaughn performance to that person in return, he can be deduct only $80 as deductions for the donations, not the full $100. So in another words, subtract the value of what you received from the total amount you contributed.
The smaller gifts are usually simple and straightforward as far as the tax guys are concerned. You declare a nominal value for your donation and get a receipt. It only gets complicated when you give larger amounts to national and international organizations.
Need some more info?
Check out the IRS documents “Form 8283” and its instructions, as well as Publication 526, Charitable Contributions. These forms and publications are all available at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Statistics provided by: Giving USA 2010
Posted by: G.Case
