No one likes to owe the IRS a big tax bill at the end of the year. You may want to use every avenue available to you to reduce the debt you will owe next tax season and also do some good with your money. Your simplest option could be to give cash and assets like clothing or household goods to public charities in your city or state. However, you may not know what ones are truly worth the time and money that you will give to them. You could save yourself hassle and the dilemma of not getting a deduction by using some simple criteria to gauge their worthiness.
These organizations are permitted to extend this opportunity to you thanks to their 501 (c) (3) licensing. This license comes directly from the federal government and establishes the group as one that is tax-exempt and non-profit. It also means that anyone who donates to it gets a receipt that will allow them to claim some or all of the amount when they file their tax returns. This exemption is taken off your tax debt or refunded in cash.
If you give money or physical assets to the organization without asking for proof of the license, you risk not being able to claim the exemption on your tax return. When you add it to your return, you more than likely will be denied the credit, and the IRS may audit you. You will then have to explain that you made a donation to an organization that was not 501 (c) (3) licensed.
When you file taxes, you have the chance to put down the amount that you donated to the 501 (c) (3) licensed group. Depending on your filing status and other factors, you might need to provide proof the actual receipt from the charity. The receipt will tell the IRS how much you gave, on what date, and the name of the charity that received your contribution.
You also can tell if a charity is legitimate if it has good reviews with the community. The better known organizations tend to advertise their services or make a point of being active in the community that it serves. Groups that are lesser known or conceal their services may not be as trustworthy.
Even so, you might simply want to make the process of donating as straightforward as possible. You may realize that the government allows tax-exempt status to most churches, temples, and other religious entities. You could contribute to your church, get proof of it at the end of the year, and claim the deduction without fear of an audit.
However, you still may be required to donate over the deduction amount, which is set at $500 in most cases. Businesses may have to give more to get the full credit. If you give less than that, the IRS may not allow you to get the credit.
If you anticipate a costly tax bill, you may find that now is the time to start using opportunities to lower that amount. You could get full or partial credit for every dollar you give to charities that serve the public in your area. These organizations have to be licensed as non-profit and likewise are obligated to give receipts you can then use to get credit on your returns.
These organizations are permitted to extend this opportunity to you thanks to their 501 (c) (3) licensing. This license comes directly from the federal government and establishes the group as one that is tax-exempt and non-profit. It also means that anyone who donates to it gets a receipt that will allow them to claim some or all of the amount when they file their tax returns. This exemption is taken off your tax debt or refunded in cash.
If you give money or physical assets to the organization without asking for proof of the license, you risk not being able to claim the exemption on your tax return. When you add it to your return, you more than likely will be denied the credit, and the IRS may audit you. You will then have to explain that you made a donation to an organization that was not 501 (c) (3) licensed.
When you file taxes, you have the chance to put down the amount that you donated to the 501 (c) (3) licensed group. Depending on your filing status and other factors, you might need to provide proof the actual receipt from the charity. The receipt will tell the IRS how much you gave, on what date, and the name of the charity that received your contribution.
You also can tell if a charity is legitimate if it has good reviews with the community. The better known organizations tend to advertise their services or make a point of being active in the community that it serves. Groups that are lesser known or conceal their services may not be as trustworthy.
Even so, you might simply want to make the process of donating as straightforward as possible. You may realize that the government allows tax-exempt status to most churches, temples, and other religious entities. You could contribute to your church, get proof of it at the end of the year, and claim the deduction without fear of an audit.
However, you still may be required to donate over the deduction amount, which is set at $500 in most cases. Businesses may have to give more to get the full credit. If you give less than that, the IRS may not allow you to get the credit.
If you anticipate a costly tax bill, you may find that now is the time to start using opportunities to lower that amount. You could get full or partial credit for every dollar you give to charities that serve the public in your area. These organizations have to be licensed as non-profit and likewise are obligated to give receipts you can then use to get credit on your returns.
About the Author:
Find a summary of the reasons why you should support public charities and more info about great charity organizations at http://www.tableofplentyhmb.org/board-of-directors right now.
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