Thinking about donating money to charity? Consider this:
Winston Churchill once said, “We make a living by what we get. We make a living by what we give.” And, a study from the Harvard Business School finds that people are happier when they give.
In order for the giver to also benefit from a donation, there are certain things to remember, in and around the Denver area:
Charitable contributions can reduce your tax bill – this is true, however, in on order to reduce your tax bill through charitable donations, you must itemize your deductions. Most people use the standard deduction, yet, by working with a qualified bookkeeper, like Net Prophet—who has worked with nearly every type of charitable donation, you might be surprised by all the deductions available, including charitable ones.
Donations must be made to a qualified organization – yes, donations must be made to a qualified organization. Donations are also not allowed for certain individuals, political candidates or political parties. Net Prophet can help clarify which organizations and individuals qualify for this deduction. Important to keep in mind is that, should you receive a benefit from your contribution, only the amount that exceeds the fair market value of the benefit can be deducted. For example, if you received tickets to a sporting event in exchange for a donation, only the amount that exceeds the fair market value of the tickets can be claimed. To deduct clothing, clothes must be in good condition. The same can be said for household items. And, there are restrictions on vehicle donations, as well. But all these deductions are easily managed with the help of an expert bookkeeper.
Different types of donations – most people think in terms of monetary donations, but there are many other types of contributions acceptable by the IRS: goods and personal property, vehicles, art, jewelry, stocks, real estate. Let a qualified bookkeeper, like Net Prophet, help you get the maximum deduction you deserve.
Keep good records – to claim a deduction, clear and concise records must be kept. Should the donation be made to a certain organization, the name, date of the contribution and the amount must be recorded on that organization’s letterhead. For donations over $250, a bank record must be kept. For payroll donations, some type of track record, like a payroll stub, must be recorded to claim the deduction.
Make sure the organization you contribute to is reputable – a well-run charitable organization spends approximately 75 percent of their budget on services and programs. The other 25 percent goes toward administrative costs. Make sure to know the spending ratio for each organization you donate to. There are several websites on the internet that can help you determine if the one you want to contribute to is credible.
At Net Prophet, we know charities and we know deductions. Year after year, we help countless Denver clients get the most out of their tax deductions to minimize taxes owed. Let us help you today. Contact Net Prophet by calling (720) 409-8227.