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Be Financially Healthy, Donate Often
By plrprousers | September 17, 2009
Charitable giving is one of the best ways to help non profit organizations and, at the same time, help your finances. A qualified charitable donation is tax deductible. When you give to a non profit organization, you need to make sure that it is a qualified organization so that the amount you give will be tax deductible which will help you lower your income tax obligation to the IRS. By lowering your taxable income, you will owe less taxes and save more money. The more taxes you save, the more money you will have to put in your bank account to use for any other purposes.
The problem is that charitable giving is not without risk. Your donations are an investment in your community, the nation, and the world. It is important to be cautious when you decide to make a donation so you could avoid scam artists who may try to make money by taking advantage of your generosity. You should be aware of non profit organizations that spring up overnight in connection with current events or natural disasters. They usually make a compelling case for your money, but as a practical matter, they most likely don’t have the infrastructure to get the money to the affected areas or people. Therefore, before you donate, you need to ensure that the non profit organization you are helping financially is legitimate.
When you make a donation of any size, you should try to claim the tax benefits. The tax benefit for charitable contributions is available for taxpayers who itemize deductions. The IRS says that about one-third of all taxpayers itemize. Those who take a standard deduction cannot claim the tax deductions resulting from charitable contributions. The IRS reminds taxpayers to keep necessary records to prove the value of their gifts. For example, for any single gift of $250 or more, a taxpayer must have a written acknowledgment from the non-profit organization by the earlier of the date the person files the tax return or the filing deadline, including extensions. A person donating property valued at more than $5,000 must obtain a qualified written appraisal. For more information on how to claim tax deductions properly, you can consult the charitable giving answer book.
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