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Donations to charities and worthy causes are a perfect way to support causes you care about and make a difference in the world. But they also help lower your tax bill, thanks to federal tax rules making most charitable contributions tax deductible. However, not every donation is deductible, so you should consult a trained tax preparation professional before writing a check. Below are a few ways to get the most tax benefit out of your generosity.

4 Tax Preparation Tips for Making Your Charitable Donations Count

1. Itemize Your Deductions

The charitable donation deduction is only available to taxpayers who itemize their deductions on their tax return. If your tax preparation professional recommends taking the standard deduction, you won’t be able to deduct your contributions to qualified charities.

2. Research the Charity

tax preparationNot every charitable cause or fundraiser qualifies you for a deduction, so do your due diligence before writing a check. Ask to see their IRS determination letter, or check with the IRS yourself to ensure that the chosen charity is considered valid by the government. 

3. Get Receipts

You must have proper documentation of your charitable donation  A canceled check, bank statement, credit card statement or pay stub (for deductions made through payroll withholdings) will generally suffice. If a single donation is at least $250, you must also have a receipt from the charitable organization acknowledging the donation. 

4. Donate Appreciated Assets

If you’re planning on making a donation, consider giving appreciated assets like stocks or other valuables. This can be ideal way to increase the deduction power of your donation, since you generally can deduct the fair market value of the asset instead of your actual cost of the property.  Exceptions exist and careful planning is needed to assure you avoid unexpected tax consequences.


 

If you’re looking for a team of accomplished tax preparation professionals with a reputation for quality advice and prompt service, turn to the accountants at Lee & Smith, PLLC. For nearly 30 years, they’ve been helping individuals and businesses throughout Texarkana, Texas area minimize their tax liability and maximize their deductions. Follow their Facebook page to learn more about their services. Visit their website or call (903) 832-4339 for an appointment.

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