October is officially Breast Cancer Awareness month, which means it’s a great time for you to give to causes that work to promote breast cancer awareness and research. Giving to a cause is not only good because it helps to make a positive change in the world, but it can also be a tax write-off for you, which means it can save you money when tax time rolls around. If you want to better understand how donations and tax deductions work together, the following information can help.
Donations and Tax Deductions to Know
Include Your Donation With Your Itemized Deductions
After you make a donation to a charity, keep a receipt or a record of that donation. Then, claim the donation in your itemized deductions when you file your taxes (using Schedule A of Form 1040). You deduct the amount of the donation from your taxes for the year that you made the donation.
Make Sure You Know the Deduction Limits
While you can deduct a great deal of the money you’ve donated from your taxes, there are limits to how much. If you give more than 20 percent of your adjusted gross income to charity, then you should worry about those limits. While there are complicated laws regarding how much you can deduct for donations (and when), if you do exceed the limits in a tax year, you can usually deduct the remaining portion from the next year’s taxes.
You Can Make Non-Cash Donations
If you choose to donate something other than money, you can deduct the full fair market value of the item that you donate, even if it has appreciated.
Utilizing Donations and Tax Deductions
There are many reasons to give to organizations that do charitable work during the year. It can help people and organizations in need, and it can lift your own spirits. One added bonus is that you can deduct those donations from your taxes, so giving doesn’t have to be a burden on your wallet or finances. Before you donate, however, make sure you are giving to a nonprofit 501(c)3 organization. While most charities are officially nonprofits, it helps to verify before you give.