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Donations

Tax Deduction for Charity Donations

Contributions to Religious places churches and non-profits are tax-deductible Donations to charity are tax deductible expenses. These donations can reduce your taxable income and lower your tax bill. Not everyone will be able to deduct their charitable contributions, however. You will need to itemize your tax deductions in order to claim any charity.

"You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions." Taxpayers are required to keep excellent records of their charitable contributions. Under the pension protestation Act, you must keep written records of all cash donations. Your records must indicate the name of the charitable organization, the date of your contribution, and the amount your contribution. Canceled checks work well as a written record, since the name of the charity, the date of the gift, and the amount of the gift will all be recorded on the check. Bank statements showing a gift paid by debit card and credit card statements showing a gift paid by credit card are also contain these same elements needed for your records.

Keeping Records of Your Charity

Taxpayers are required to keep excellent records of their charitable contributions. Under the Pension Protection Act, you must keep written records of all cash donations. Your records must indicate the name of the charitable organization, the date of your contribution, and the amount your contribution. Canceled checks or checks number required working well as a written record, since the name of the charity, the date of the gift, and the amount of the gift will all be recorded on the check. Bank statements showing a gift paid by debit card and credit card statements showing a gift paid by credit card are also contain these same elements needed for your records.

Charitable organizations will often provide donors with a written letter acknowledging the gift or with a receipt for the donation. These acknowledgment letters should also be kept with your tax records. If a tax return is audited, the income tax department can disallow charitable donations of certain amount or more if you don´t have the written acknowledgement from the charity that documents your gift. The Income Tax department advises, "If you made more than one contribution of certain amount or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions"

Non-Cash Contributions of Property

Contributions of property (other than cash) are subject to strict record keeping and substantiation rules. You must be able to substantiate the fair market value of the goods or property you donated, plus keep any written acknowledgments you receive from the charity.

Fair Market Value of Contributed Property

You must make an assessment of the fair market value of the property you contribute. Any immovable or moveable property Contributions Must Have Written Acknowledgement.

If you contribute a car, truck, boat, airplane, or other vehicle, you must received a written acknowledgement from the non-profit before you can claim a tax deduction.

Non-Cash Contributions over INR 300000.00 (three lakhs): Must Have Written Appraisal

If you contribute property worth more than INR 300000.00 (three lakhs): you must obtain a written appraisal of the property´s (FAIR MARKET VALUE) Given these conditions, an asset´s fair market value should represent an accurate valuation or assessment of its worth.

Limits on the Charitable Contribution Deduction

Your charitable contribution tax deduction may be limited. There are limits specific to charitable contributions, and there are general limits on itemized deductions.

50%, 30%, and 20% Limits on Charitable Contributions

  • Generally, you can deduct cash contributions in full up to 50% of your adjusted gross income.
  • Generally, you can deduct property contributions in full up to 30% of your adjusted gross income.
  • Generally, you can deduct contributions of appreciated capital gains assets in full up to 20% of your adjusted gross income.

Charitable contributions in excess of these limits can be carried over to the following tax year. The excess contributions can be carried over for a maximum of five years.

Not Tax Deductible

Contributions are not tax deductible if given to any of the following:

  • Political parties, political campaigns, or political action committees.
  • Contributions given to individual people.
  • Fees or dues paid to professional associations.
  • Contributions to labor unions, chambers of commerce, or business associations.
  • Contributions to for-profit schools and hospitals.
  • Contributions to foreign governments.
  • Fines or penalties paid to local or state governments.
  • The value of your time for services rendered to a non-profit.