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Gifts pay off on your taxes

Your generosity when giving donations to charitable organizations or the likes of it will go a long way when preparing your federal tax return. To top it all, it makes you feel good to have been able to help others. Donations to charity adds to lowering your tax payments because they can be deductible when tax filing time arrives.

There are many kinds of donations and ways you can use to give, often people do this in the most usual way which is in the form of cash donations. Cash donations can be in not just currency but also monetary.  In the form of checks, credit cards and even cell phone texts. This can be found in the Internal Revenue Service’s dictionary. A lot of documentation though, is required by the IRS.

Many charities accept used household goods, used clothes and in effect the fair market value of these items can be applied as a tax deduction. However, a law was enacted in 2006 that requires any donated household goods be in good condition. These change or law was enacted to solve 2 problems that may arise

The first being that, taxpayers started using charitable organizations as a place to put articles that really should have belonged to a trash bin instead of a donation bin.

The second, is that the donors started to over value the articles donated so as to get a bigger tax break or incentive. The lawmakers were faced with the same problem when they tightened rules on cars being donated.

Now comes the big task of tallying your tax benefit. You’ve learned that itemizing is the path to take. And so now you tally what your generosity has earned you.

Unlike medical or miscellaneous deductions, when comes to charitable donations, there is no limit to the amount one donates or the number of times one can donate. One can give a meager amount and still be added to the rest of deductions being itemized.

There is a lot of room in giving donations. You are not limited to only cash donations. In fact one can donate appreciated assets, merchandise etc. you can even deduct a portion of a ticket that you bought to attend a charity event.

 

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images from: econintersect.com and alpertlegal.com