Donating to Charities? Do it RIGHT!

Donation basics to ensure a tax deduction

Donating to charity not only helps others, it can reduce your tax bill - but only if the charity qualifies as a tax-exempt organization.
 
Checking for qualified status
If you plan on itemizing your deductions on your tax return, make sure the organization you're donating to is designated by the IRS as a 501(c)(3) organization in good standing.
 
You can find a list qualified 501(c)(3) organizations on the IRS website. Remember, even last year's qualified organizations could lose their non-profit status if they do not submit their annual tax filing!
 
Is it a good charity?
Ensuring a tax-exempt status is not your only step. You should also conduct research on your charitable organization. There are many websites that evaluate organizations, how they spend their funds, and how efficient your donation is being used. So check out your charities on sites such as Charity Navigator, Charity Watch and BBB Wise Giving Alliance.
 
Get your documentation right
Here are a few other key requirements if you want to deduct your charitable donations:

• Keep good records. The tax law imposes strict recordkeeping requirements. Notably, for monetary gifts of $250 or more, you must obtain a written acknowledgment from the charity (with specifics) before you file your return.
• Understand rules around quid pro contributions. If you receive a benefit in return for your donation (e.g., dinner at a fundraiser), your deduction is limited to the difference between the donation amount and the value of the benefit. Obtain substantiation from the charity.
• Know the annual limit. Under the recent legislation, the annual deduction for monetary contributions is currently limited to 60% of your adjusted gross income (AGI), up from 50%. Stay below this threshold.
• Follow property rules. Besides a 30%-of-AGI limit for gifts of appreciated property, other special rules may apply. For instance, you must ensure that the property is used to further the 501(c)(3) organization's tax-exempt mission. If you donate property valued at more than $5,000, obtain an independent appraisal.

 
You may be able to reduce your tax liability by boosting your donations late in the year and pushing your total itemized deductions amount over the standard deduction threshold ($12,000 single/$24,000 joint).

"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
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For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

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