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filing for your taxes

Charity is not a foreign term to most people. A lot of these people actually choose to donate. Charity is very important in this world seeing as without it, how humane would that be? So charity basically means  the act of giving money, goods or time to the unfortunate, either directly or by means of a charitable trust or other worthy cause anything that has to do with giving to the needy. Charitable giving as a religious act or duty is referred to as alms giving or alms. The name would basically come from the most obvious expression of the virtue of charity, like giving the recipients of it the means they need to survive. The impoverished, particularly those widowed or orphaned, no families, and the ailing or injured, are generally regarded as the proper recipients of charity. The people who cannot support themselves and lack outside means of support sometimes become ‘beggars’, or the homeless, who are then directly soliciting aid from strangers encountered in public. Although you will be shocked to know that some people actually do not do this for the right reasons. You see when you donate to charity, you get something in return other than just the feeling that you have done something good. Now, some people donate to be able to get this reward. Not many people have thought of this but you get some deductions when you donate to certain charities. It is pretty mean, but some people actually do have good intentions. You will be able to avoid your taxes if there are certified charities which you have donated to. Mostly, people who do this just for that are either well of or not. When you have donated, at the end of the year, that is when your taxes are to be filed and you get the reductions.




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Tax filing for charity 101

How does tax filing for charity work exactly? The tax deduction for charitable donations was established back in 1917, just four years after the federal income tax was introduced as well. While there have been some changes which have been made over the years, in its basic form this provision would allow taxpayers to then deduct donations to nonprofits and charities from their taxable income. So if a taxpayer earns $50,000 for example and gives $2,000 to charity, she would only have to pay taxes on $48,000. The rationale behind this provision was initially that the taxpayer who gives away $2,000 does not have that money available to spend on herself, so it should not be counted as part of her income anymore. Nowadays, the deduction is more commonly thought of as an incentive which is dangled before taxpayers to coax them into donating more money to charity. By allowing taxpayers to be able to deduct charitable donations from their taxable income, the government would essentially agree to pay for a portion of the donation.

While all of this sounds great in principle and soft to the ears, there is actually a big catch which all should know about. In principle, not all taxpayers benefit from the charitable deduction. Initially, the income tax would only be applied to a rather small number of wealthy Americans, but during World War II it was expanded to affect roughly 75% of the population in comparison to now. Instead of having all of these tax filers list their deductions individually around $42 for prescription medicine here, a $100 donation to a museum there, the IRS introduced the “standard deduction” in the year 1944. The standard deduction lets all filers lower their taxable income but only by a fixed amount. For the 2012 tax year that amount would be around $5,950 for single taxpayers and $11,900 for couples or those with spouses. That means that you only have to keep track of your deductions and itemize them on your income tax return if they exceed $5,950 or $11,900 if you are then married. This would save a lot of taxpayers and not to mention the IRS as well a huge headache, but it also means that the 70% of filers who take the standard deduction do not get to write off their charitable donations.

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Question for tax filing for charity

Is it true that there are donors who would respond to things like tax incentives? The deduction for the charitable contributions affects taxpayers in two different ways. On the one hand, you may also have the “price effect.” As noted above, there are higher marginal tax rates which reduce the price of giving, creating a bigger incentive to contribute to charities. However, high marginal tax rates would then also mean that people would then have less money left in their pockets after having paid their taxes. In general, if the people’s incomes were to be reduced, one would expect the people to then become less generous donors. After paying for rent, food, and utilities, they would then have less money left over for non essentials for things like vacations and charitable donations. This is what would be called the “income effect.” Note that the income and price effects would work in opposite directions. Higher marginal tax rates incentivize donations which are through the price effect, but they simultaneously create a disincentive which is then through the income effect. Several economists have been able to examine donors’ responsiveness to tax incentives and over the past few decades as well, but the results would remain inconclusive. Most studies find that donors actually do respond to tax incentives, but then the historical record shows that the level of charitable contributions would remain relatively constant over time when measured as a proportion of GDP regardless of the available tax incentives. Some studies would even suggest that higher earning taxpayers are more responsive to the incentive than those who are less well off or do not earn as much and that there are differences between types of charities for example religious, social, educational, etc. that would receive donations. Many policy analyses like CRS, CBO, TPC would therefore calculate the upper and lower limits of a range into which the effects of proposed policy changes are expected to fall rather than a specific estimate only. Basically or all in all, reforming the deduction on charitable contributions is necessarily a bad thing for the arts. There are some ways of changing the tax code that could actually increase revenues and diversify the sources of income as well all for arts organizations, even while helping to reduce the federal deficit.

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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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Tax filing for you gifts

Start by asking yourself when you would know your donation is deductible. To know when your donations or contribution are deductible, you need to take the incentive and ask the organization directly if your contribution is tax deductible. More popularly, under federal income tax laws, all or at least part of your charitable donation may be deductible, or it may not be deductible as well at all under certain circumstances. Moreover, please note that if a group tells you it is “tax exempt,” that does not immediately mean your contribution is tax deductible. Tax exempt is something that simply means that organization does not have to pay federal income taxes. You should contact your local IRS office or the organization directly if you are not sure about an organization’s tax status or the tax deductibility of contributions. Now from your mailing list, while there is still no known or proven foolproof way of eliminating your name from all mailing lists due to advanced technology, there are some simple steps you can take to cut down on the amount of charitable solicitations that you may usually receive.
You can actually write or telephone the organization directly and file a request that your name be removed from its mailing list. One thing to remember is that you cannot simply return the mailing you received with a written note, something like saying “please do not send future solicitations and emails to me,” because most charities use non profit postal rates that cover one way delivery only. In turn, you must add additional postage or the letter will not be returned to the charity, and your name will then not be removed from the charity’s mailing list, putting all your efforts to waste. Now, when you decide to make a donation, please do not forget to include a note to the organization requesting that your name should not be rented or sold to other organizations, because this may happen. If you have contributed to a certain charitable organization in the past, your name is more likely placed on a something called a donor list. Then, your name will be exchanged or sold to other nonprofit organizations who are interested in sending their appeals to known donors, or to direct mail marketers.

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3 smartest strategies for charity

The 3 smartest strategies for charity

For some people, charity is considered something which is lifelong and a huge part of each of their lives. It is not just about donating clothes and writing some random check to fund and support an organization, it’s something which is enjoyed and loved by people. Especially those who frequently work on donating and funding charities. It is also sometimes even an integral part in ones investment plan. This will explain to you 4 strategies to help make the most out of your charitable giving.

The first would be something known as the Charitable remainder trust. This charitable remainder trust is actually a private fund which you were to set up and in return contribute to as well. This would be able to provide you and your beneficiaries, which you chose, with somethings called a taxable income. This would run on for a certain number of years. The remainder of your money would be passed as tax free to your chosen charity. Now our next strategy would be the pooled income fund. Take note that only a fee charities allow you to donate through this pooled income strategy. This actually works similarly to a charitable remainder trust but instead this would allow the charities to take on what is know as administrative chores which are mainly for the annual fee. Now the charity pools donations made from different people, invests all these proceeds and then this results into making annual and taxable payments to you and others who have donated for life based on what you have contributed.

Lastly would be the private foundation. This is a tax exempt charitable organization which is set up and funded as well by only a single person or a group of individuals and businesses. If you stay in the limits, you will be able to deduct contributions to a private foundation which will be found on your federal tax return. In most cases the foundation must distribute around 5% of it’s value to charity each year. This does not include any tax it pays on investment income. These are the 3 best strategies for donating to charity.

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Gifts to charity pay your taxes



When you start to prepare your federal tax return, you must not by any circumstance forget to count any of your gifts to which you gave to charity. Your attitude of charity can do more than just make you feel good for all the help you have given and provided to others. When the tax filing time arrives, your gifts will also be able to help you in areas regarding your taxes. Your gifts will be able to lower your tax bill since they may be of course deductible donations. There are many different types of ways to give. One of the most common is cash donations. In the Internal Revenue Service’s dictionary, cash does not just mean currency, but also amounts which are monetary and donated by check, credit card or cellphone texts. When you do donate this money or gifts, you need to expect and be ready to deal with IRS documentation rules. There is one other thing to remember which is your timing. Now your donations will count once you are able to file your return in the season of spring, but do not forget to make sure that all your charitable donations are to be made by Dec. 31 of the year before.
Now the charity rollover option is also a good strategy for those who may face limits on their donations which are based on their income. Most of the time, you will not be able to donate any amount that would exceed the 50 percent of your adjusted gross income. If and when the money were to go directly from the IRA to the charity, it would not count against that limit because it is not included in the filer’s gross income. Although this may seem spotless, there is in fact one drawback. This would be that such direct gifts will not be deductible by the donor himself. That unfortunately, might not exactly be that much of a disincentive though. Taxpayers would usually itemize to be able to claim any of the charitable deductions. It would be surprising to know that many taxpayers which are of older age, or the majority of filers of all ages, would actually choose to claim the standard deduction instead.


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Charity Donations have Tax Deductions

Many would think that taxes do not or should not apply when it comes to taxes. Unfortunately we don’t exactly get what we want. Donations to charities are tax deductible expenses. These deductions though may lower your taxable income and lower you tax bill. One thing to know is that this may not exactly apply to everyone who wishes to deduct from their charitable donations. Your tax deductions must be itemized for you to be able to claim any charity. The IRS themselves mentioned in the IRS Publication 78 that “You may deduct charitable contributions of money or property made to legit qualifies organizations if you itemize you deductions”. You are actually presented with a set of rules on claiming you charitable contribution deduction. One would be the fact that what you donate must actually be cash or a property. Promises to donate cannot be deductible until the payment is actually made. You must also be able to donate to a qualified tax exempt organization. Usually, charities will be the ones to let you know whether or not they have received their tax exempt status. Some orgs. However are not required to obtain the status from the IRS. Usually these are churches and other religious orgs. As it is stated above, it is very important that you do not forget to itemize. Since giving to charity would be an extremely great tax plan, it really only applies to those people who are eligible to itemize their deductions. A good tip as well would be keeping records of everything mostly your requirements. This would basically include saving cancelled checks, letters from your charities and appraisals for properties which may have been previously donated. Lastly keeping records of your charity mainly the charitable contributions. You must keep a record of all donations which are cash that you may have made to a charity. If you cancel any records, you must record that as well. Regardless of the amount donated, records must be kept in order to claim the right amount of tax relief on all your gifts to charities. By doing all this, you will be able to get tax relief for any gifts and donations you have made to charity.

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Filing Tax Deductions due to Charity Giving


Donating to charity is another way to get more deductions in filing your taxes. Most Americans donate to charity to fulfill their charity duties as well as increasing the deductions for their taxes. What you need to learn is about how you can donate, where you can donate and how to determine how much deductions you can make.

Fair Market Value is one of the important things you need to familiarize yourself with when you plan to donate and use it as tax deductions. The value of the item at the time you donated is called the fair market value. You would get a retail price of the item but instead will get the fair market value of it once donated. You have to remember that you also have to donate to charitable organizations that are deemed qualified by the IRS.

Reporting your itemized donations must be done with an utmost care, because IRS requires a detailed itemized donations and its fair market value being checked if you have declared it correctly. Reporting your tax donations you would need to do the following: Fill out the Schedule A Form I040, Track donations with a log along with dates and amounts as well as its fair market value. Keep in mind that if your donation exceeds $500 then you will also need to complete the Form 8283.

Another thing is that you have to keep an itemized list of the donations made every time you donate. When making donations, keep in mind of the following items that you can donate Cash or Property and Vehicles, clothes, toys, food and other things the qualified charity needs. As long as you keep track of your non cash donations, you can file them for tax deductions. Keep in mind that you cannot receive any benefit from the donations you’ve made.

Also, Church donations will need a copy of the receipts of the donations, since IRs would need to see that as well. Anything like mileage return from the charity must also be indicated on your tax deductions because IRS would definitely look for that and validate all information needed. The key is to be as detailed as possible, keep a clean record and honest record of all your receipts and documents to present to the IRS. There are various websites; you can check out to help you in filing your taxes and itemizing your donations.

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Facts and Figures

Facts and Figures

Facts and Figures

Charity Sector

Charity Sector

Looking at the numbers and more factual studies regarding how much Americans are giving to charity, National Center for Charitable Statistics have been keeping count and have been doing statistics to monitor just how much people are giving and receiving. Households alone or individual givers of the country are contributing the vast majority of charity amounting to $228.93 billion, taking up all 72% of the charity giving percentage of United States, this is as of the 2012 records. The other sectors taking up the left percentage are from corporations, 6% or $18.15 billion, the foundations taking up 15% or $45.74 billion and last but not least from the bequests or an act of giving the property by will, amounting to $23.41 billion taking up the left 7%.

As for the charitable donation by the state, the charitable deductions went from $169.8 billion in 2010 to $174.5 billion in 2011. And when there is an increase in donations, it means there is also an increase in the charitable deduction per return and looking at the numbers, it raised up to $1,201 in 2011, the top contributing states of which are New York, Wyoming, Maryland, District of Columbia and West Virginia in no particular order.

Some of the statisticians that are responsible for this count are the NCCS or National Center for Charitable Statistics and the IRS or Internal Revenue Service. These are the organizations that make the data trustworthy and useful. And when people will just take notice of reading these statistics, they will realize that charity giving is so grand that it is somewhat a necessity for the state to live, or even the country in itself. There are so much money flows, in every form, passing through each day that the operation reached and exceeded $335 billion. Imagining living in this country removing everything that are donated by the people, where will the people go for help, if not for these charities, the economy would not be as stable as it is now. This total amount is about 2% of the gross domestic product, and talking about the GDP of the whole country, 2% is a lot of money.

For the receiving side statistics, the religious organizations are still on top of the list. This means that majority of the people still give back to their community chapel or place of worship, may it be for personal reasons or simply a requirement, and still it accumulates the most donations. However, it has been said that it is continuously dropping in amount through the years even though the donations in general is increasing. And coming second in receiving most donations was in education with 16% of the total donations.


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