Do you spend more money this month than usual?
I know I do…or at lease my “household” does!
If part of your spending is giving extra to charities, churches, and events, here are some tax tips that may help.
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Charitable Donations That May Be Tax Deductible*
Gifts and charitable donations that are given to 501(c)(3) organizations– many churches, charities, and non-profits qualify – are deductible to the extent the value you give exceeds the value you receive.
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Scenario 1: If you write a check for $100 to a qualifying organization, and receive no goods or services in return, than your charitable donations is $100.
This is the most common type of giving people do. Usually, whenever you donate to your church, or to a charity, this is the type of giving you do.
Scenario 2: If you donate a check for $100 to a church/charity as part of a fundraiser (or silent auction) and in exchange receive a ticket to a dinner with a value of $30, your charitable donation is $70. ($100 value donated less $30 value received).
Scenario 3: If you give clothes that cost you $500 to an organization, such as Goodwill that are worth $100 at the time of the donation, your potential tax deduction is $100.
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Business/Employee Gifts and Tax Deductions
If you give gifts to employees or work associates, you can deduct part of the cost of that gift.
The amount of the tax deduction is limited to only $25 per gift recipient per year. So, if you give three $50 gifts to three different people, your total tax deduction is $75 (3 different individuals multiplied by the $25 maximum per recipient.)
*Please keep in mind, that for charitable donations to be tax deductible, you must be able to itemize your tax deductions. Feel free to contact me if you have any questions about whether or not you qualify for these type of deductions.
–Written on December 10, 2012.
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