Tax Professor
by on January 1, 2022  in Business /
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Giving to charity feels good and there’s even a financial benefit. You can deduct any charitable donations from your taxable income. However, there are many rules that govern these donations. Cash gifts are handled differently than non-cash gifts, and different rules apply depending upon the amount of the donation.


Tax laws can be complicated, but you can easily find out the details for everything you need to know with some online research or from your local tax professional.


Check out these 8 tips to ensure you’re getting the most out of your charitable donations:


  1. Ensure the organization qualifies before claiming a tax deduction. For example, contributions made to political candidates or to a specific person are non-deductible. There’s a process an organization goes through to acquire the proper status with the IRS and become qualified.


  • Any organization you contribute to financially can provide information about their status regarding tax deductions.
  1. If you’re donating anything other than cash, the value is claimed at the fair-market value. These values would be similar to what you would pay if you bought something at a thrift store or yard sale.



  • There are also special rules when you’re donating a vehicle.
  1. Maintain accurate records. A receipt is an excellent way to keep track of your donations. In lieu of a receipt, your own banking records are also sufficient. For any amounts over $250, it’s best to have both a receipt and a banking record.
  2. Reduce your deduction by any value you receive. If you’re receiving any benefit from your donation, like tickets to sporting events, you’re required to subtract that amount from your donation when claiming a deduction on your taxes.


  • For example, if you donate $500, but benefit by receiving “free” carpet cleaning worth $200, your tax deduction would be $300.
  1. Contributions above certain amounts have different rules. A single donation of $250 or more has certain reporting rules. Another set of rules, primarily an appraisal by an expert, comes into play when the amount is $5,000 or more. If you’re making non-cash donations that total $500 or more, there are other rules. See for more information.
  2. Consider giving assets that have appreciated. Gifts of stock, for example, that have appreciated in value have an added benefit. You get to deduct the full value, and you’re not taxed on the capital gains, since you didn’t benefit from it.


  • The extra money comes off of your taxes and goes directly to the charity. Everyone wins, except the IRS.
  1. You can deduct your costs for helping the charity, too. You can deduct mileage and any other out-of-pocket expenses related to any direct service you provide to a charity. This can include parking, tolls, travel expenses, lodging, and food.


  • Proceed with caution when you’re claiming these types of deductions. The IRS tends to scrutinize anyone who takes advantage of this opportunity. Honesty is the best policy!
  1. The limit is 20%. You can certainly give away every last cent to the charitable organization of your choice. However, your charitable tax deductions are limited to 20% of your adjusted gross income. But, you might be able to carry over excessive contributions to the following tax year. See a tax expert if your contributions exceed this limit.


There are many great causes that could use your support, and it feels wonderful to be able to help them! It’s even better when you can reduce your tax burden in the process! Use these tips to claim the tax deductions you deserve.


The Tax Professor recommends that you consult your tax advisor before making any tax-related decisions.

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Tax Professor
Tax Professor is the WealthCare Connect virtual instructor that provides members with educational tax content. All content is for general informational purposes only and does not constitute tax advice. Consult with a licensed tax professional before making any tax decisions.
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