Giving back to your local community by donating to charity is an excellent way to help those in need. However, many people are unsure how to go about this and how it could impact their income tax return. Before making your donation, learn more below.
What Are Charity Tax Donations?
Charity tax deductions are income tax deductions that you receive by donating to charity. You can donate in several ways, including by giving money, clothing, toys, or food.
When you donate, you'll be given an itemized receipt that you need to keep for filing taxes. These documents show that you gave to charity, which is necessary if you're ever audited. You should also take a few photos of the items you're donating to make it easier to prove if questions arise.
How Will Giving to Charity Benefit You?
One of the biggest reasons many people give to charity is to make the world a better place, as your donations can help clothe, feed, and shelter those in need. However, other perks come along with charitable donations, such as tax deductions.
An income tax deduction lowers the taxable income you have to pay at the end of the year. For instance, if you make $60,000 and you have an allowable charitable tax deduction of $10,000, you only have to pay taxes on the remaining $50,000.
You can also write off different amounts based on the type of charity you give to. For instance, the IRS allows you to deduct up to 50% of your taxable income on donations given to public charities, and 30% of donation values when giving to fraternities or cemeteries.
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