2014 is about to end and you might be thinking about how to lower your tax bill. Given the holiday season, you might also be thinking about how to do some good in the world. There’s still time to do both!
Charitable contributions can be an effective tool to lower your tax bill if you itemize your deductions. Here are some other things to consider:
- You have to donate to a qualified charity- not individuals, political organizations or candidates.
- Keep records! Any cash you donate must have a written record with the charity name, date, and amount. For donations over $250, the charity must give you a written letter.
- Donating clothing or other items? You need to file Form 8283 Noncash Charitable Contributions http://www.irs.gov/pub/irs-pdf/f8283.pdf if the gift is more than $500. Gifts over $5,000 need an appraisal.
- You can only deduct a contribution if the value of anything you receive is less than your contribution. For example, if you paid to go to a charity dinner, only a portion of that is deductible.