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Five Facts about Charitable Contributions | Business

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Five Facts about Charitable Contributions
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With the holidays around the corner, many people will be making donations to benefit charitable organizations. However, come tax time, the person who made the donation might also benefit. That’s because taxpayers who donate to a charity may be able to claim a deduction for the donation on their federal tax return.

Here are five facts about charitable donations:

Qualified Charities. A taxpayer must donate to a qualified charity to deduct their contributions. Gifts to individuals, political organizations, or candidates are not deductible. To check the status of a charity, taxpayers can use Exempt Organizations Select Check on IRS.gov.

Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and itemize their deductions. To do this, taxpayers complete Schedule A, Itemized Deductions. They file this form with their tax return.

Getting Something in Return. Taxpayers may receive something in return for their donation. This includes things such as merchandise, meals, and event tickets. Taxpayers can only deduct the amount of the donation that’s more than the fair market value of the item they received. To figure their deduction, a taxpayer would subtract the value of the item received from the amount of their donation.

Type of Donation. For donations of property instead of cash, a taxpayer can only deduct the fair market value of the donated item. Fair market value is generally the price they would get if they sold the item on the open market. If they donate used clothing and household items, those items generally must be in good condition. Special rules apply to certain types of property donations, such as cars and boats.

Donations of $250 or More. If a taxpayer donates $250 or more in cash or goods, they must have a written receipt from the charity. The statement must show: • The amount of the donation. • A description of any property given. • Whether the taxpayer received any goods or services in exchange for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.

Taxpayers can also use the Interactive Tax Assistant, Can I Deduct my Charitable Contributions? This tool helps determine if charitable contribution is deductible.

This information is not intended to be a substitute for specific, individualized tax advice as individual situations will vary.  Royal Alliance Associates, Inc., Georgetown Capital and its advisors are not engaged in rendering tax advice.

These links are provided as a convenience and for informational purposes only. We assume no liability for any inaccuracies, errors or omissions in or from any data or other information provided on the pages, or for any actions taken in reliance on any such data or information.

Prepared by the IRS.  For more information go to www.irs.gov.

Securities and investment advisory services may not be available in all states.

Representatives offer Securities and Advisory Services through Royal Alliance Associates, Inc., member FINRA/SIPC and a registered investment advisor.

Insurance services offered through Georgetown Capital Group, which is independent of Royal Alliance Associates, Inc. with separate ownership, and is not registered as a broker-dealer or investment advisor.

 Joseph V. Curatolo, President of Georgetown Capital Group

5350 Main Street, Williamsville, NY 14221

Phone #(716) 633-9800  Toll Free 1 (800) 648-8091  Fax #(716) 633-9789



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