How to Reduce Taxes With Charitable Contributions
- 1). Select a charity or charities. To qualify for a tax deduction, your charity must be a bona fide tax-exempt organization. Contributions to individuals, political parties and candidates are not tax deductible.
- 2). Obtain a receipt for your contribution. Any legitimate charity will happily issue you a receipt. If you cannot get a receipt, then donate by check, so that your canceled check serves as a record of your contribution. You must be able to show proof of the contribution for any charitable gift of $250 or more.
- 3). File your taxes. To claim charitable giving deductions, you must file using a Form 1040 and itemize your deductions on Schedule A. If you made noncash charitable gifts of more than $500, you must also file IRS Form 8283, Noncash Charitable Contributions. If you gave more than $5,000 worth of noncash contributions in the form of a single item or a group of similar items, you must also get the item or items appraised by a qualified appraiser.
- 4). Compare your tax bill with the charitable giving deduction to your tax bill if you take the standard deduction. To itemize deductions, your total itemized deductions must exceed 2 percent of your annual income. Further, you can only claim a tax benefit to the extent your deductions exceed 2 percent of your annual income. If you gave a comparatively small amount, or you are in a low tax bracket, you may be better off taking the standard deduction of $5,700 for a single filer and $11,400 for a married couple (as of 2010).
