Americans donated an estimated $295 billion to different charities in 2006, a new record, according to “Giving USA 2007,” a report from the Giving USA Foundation. Our generosity allows us to make a difference to a wide range of worthy causes.
There’s a reward for this generosity, too, because it also qualifies you to take tax deductions for your donations. Recent changes in the tax law have made a difference on which deductions you are allowed to claim, however, advises the Tennessee Society of CPAs.
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First, you should be aware that you can only claim a charitable donation if you itemize on your tax return. In general, you are allowed to deduct your contributions of cash, checks or other monetary gifts to a qualified tax-exempt organization, such as a house of worship or charity. In the past, it might have been acceptable to keep personal notes showing that you had dropped some cash in the collection plate. Under the new rules, when you donate cash, you will need documentation.
If you give money, your documentation can be a canceled check or a bank, credit union or credit card statement showing the donation. If you give monetary gifts, you will need a written record of what you gave. No matter what you give, a bank record or a receipt from the charity must include the organization’s name, the amount of the contribution and the date of the donation. If you donate through a payroll deduction, you will need a pay stub, Form W-2 wage statement or some other documentation from your company showing how much was withheld, along with a pledge card that gives the name of the charity. Without these records, you won’t qualify for a deduction.... read the rest of the story by Subscribing now.