First of all the charity donation must really happen because of a pledge or promise to donate is not enough for a tax deduction. The donor must be careful to who or what is giving the donation. The receiver must be eligible to itemize the donation. The organization that receives the donation also must have tax-exempt status.
Record keeping requirements for the documentation of the charity donation must be met. Taxpayers are required to keep excellent records of their charitable contributions. Donors must keep written records of all cash donations. Donations of $250 or more will not be allowed as a tax deduction without supporting documentation. Records must indicate the name of the charitable organization, the date of your contribution, and the amount of the contribution. This new record keeping requirement took effect beginning with the 2007 tax year.
If a donation is other than cash it is also subject to a tax deduction with a note that every documentation regarding that particular donation together with written acknowledgment received from the charity must be saved. If non-cash donations exceed $500 IRS Form 8283 must be attached. If the donation is a vehicle such as a car, boat, truck or airplane which worth exceeds $500, a written acknowledgment from the non-profit organization must be received in order the be eligible for tax deduction.
There are certain limitations to this kind of tax deduction. If the donation is cash, then up to 50% of adjusted gross income can be deducted. If a donation is a property, then up to 30% of adjusted gross income is deductible. If the donation is appreciated capital gains, then up to 20% of adjusted income is deductible. The excess contributions can be carried over for a maximum of five years.
Donations are not tax deductible if they are given to individual people, labor unions, business associations, chambers of commerce, foreign governments, political parties, professional associations, for profit schools and hospitals.
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