Charitable contributions are always good ways to help support the community while leaving a strong feeling of personal satisfaction. They are also a way to lower the amount that you will end up paying Uncle Sam, provided that you follow a few guidelines that will reward you with tax deductions for your charitable contributions.
To take advantage of tax write-offs for charitable contributions, you must itemize your deductions on your tax returns. Keeping receipts is an essential step in this process. When giving to an organization that is qualified as a charitable organization (see www.irs.gov for listings), it is important to retain documentation written by the organization that outlines your contribution. A receipt is your easiest and best bet, although in some instances, bank account records and credit card statements can be enough to validate your tax deduction.
Also, be mindful of the value that the organization is able to give your contribution. If you want to donate stock or real property that has declined in value since you have purchased it, it may be a good idea to sell the property and claim a loss on your tax return, while at the same time donating the proceeds of the sale to a charitable organization. Contributions are only eligible for a write-off based on their fair market value.
These are just a few tips that can help you maximize your tax deductions. Remember that any contribution you actually make before the ball drops on New Year’s Eve can be deducted on your 2012 tax return.