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In order to qualify for a deduction, the recipient of your donation must be organized and operate exclusively for religious, charitable, scientific, literary, educational and certain other narrow allowable purposes. Contributions to other organizations that receive tax-exempt status do not qualify for the deduction. See Publication 78 for a complete list of organizations. To get the maximum deduction you need to keep records and receipts for your contributions as follows:
Additionally, any cash contributions to a charity that exceed $250 require reciepts to verify the deduction. This $250 applies not only to individual cash contributions but to the aggregate of cash contributions that were given. This means that all tax returns with cash contributions that add up to $250 or more must have receipts to back up all the contributions including statements from the charities.
Click here to read How to Maximize your Charitable Contribution Deductions.
Deferred Charitable Giving - If you are charitable inclined, there are tax advantage ways to make a gift to a favorite charity while enjoying the income from that gift for your lifetime. Many educational and charitable organizations offer plans that combine the benefits of immediate income tax deduction and lifetime income from the charitable gift. In most cases, you can make the gift in cash or securities. Tip: A gift of highly appreciated stock would give you the biggest tax savings. You will be saving both capital gains tax by not selling and a charitable deduction based on the fair market value instead of your original cost. This type of giving is a great estate planning tool for the following reasons:
Charitable Split-Dollar Insurance Transactions are under attack by the IRS. Generally, to be deductible as a charitable contribution under IRC 170 or IRC 2522, a payment to charity must be a gift. A gift to a charity is a transfer of money or property without receipt of adequate consideration and with donative intent. IRS goes on to say under IRC 170(f) and 2522(c) no charitable deduction is allowed for a transaction to charity of less than the taxpayer's entire interest in any property. Thus, no charitable split-dollar insurance transaction involves a transfer of funds by a taxpayer to a charity with the understanding that the charity will use the funds to pay premiums on a cash value life insurance policy that benefits both the charity and the taxpayer's family. IRS is warning all parties involved, including the charity, the taxpayer and the tax preparer, that they will challenge these deductions and impose penalties on all participants in these transactions.