Tax Rewards For Year-End Generosity
If you're looking for ways to cut your taxes before the end of the year, consider donating cash or property to a qualified charitable organization. Besides helping out a worthy cause, you can reduce your annual tax bill, as long as you adhere to the rules. But there are several potential obstacles to overcome.
For starters, you generally can deduct the full amount of cash contributions to charity as long as the total doesn't exceed 50% of your annual adjusted gross income (AGI). (If you give more than that, you can carry the excess forward to future tax years.) Yet the IRS insists on strict recordkeeping for cash and cash-equivalent donations.
To claim a deduction, you have to be able to provide a bank record or a written communication from a qualified charitable organization, required for gifts of $250 or more. Such a notification must show the amount of the contribution, the date it was made, and the name of the charitable organization. And you need to have it in hand by the date you file your return or the date that it's due, plus any extensions.
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