Philanthropy is expressed through acts of charity and generosity. As more and more people find themselves unable to keep afloat financially the need for charitable donations has never been stronger. Not only do your fellow humans need financial assistance, the organizations that sponsor programs designed to help anyone (or anything) in need survive on donations. Most people who donate to charity do so because it is the right thing to do and it feels good to help others in need. That feeling in itself is enough motivation for those that are able to help however it is important to know that helping others can save you money as well.

Donations and Tax Deductions

When you donate either money or items to a qualifying charity you can reduce the amount of income that is subject to tax. Here are a few tax rules that you should understand to ensure you receive the maximum tax benefits from your donations.

• Check to see if the charity you are donating to is qualified by the IRS. Obviously this should not deter you from making a donation to a cause which you believe in, however you should know that not all charities qualify, making it necessary to know where you stand before attempting to claim a tax deduction.
• You can only claim a deduction after you have physically donated cash or property. If you are in a situation that requires a pledge or promise of a donation, that in itself in not tax deductible until the actual donation has been made.
• Document donations to provide necessary proof required by the IRS. You will need to keep good records to be eligible for a tax deduction. Save canceled checks, letters of acknowledgement from the charity and appraisals (required for deductions of more than $5,000) for property donated.
• Determine the value of donated property. When claiming a non-cash donation on your tax return you will have to claim the fair market value of the donation. The IRS has a guideline that can help you determine the fair market value of your items.

The following contributions are not considered tax deductible.

• Volunteering your time is a great way to help organizations in need of assistance, however you will not be able to claim the value of your “time” as a tax deduction.
• Money donated to business associations, labor unions, individual people, foreign governments and political donations.
• You must donate to a non-profit organization. For-profit organizations do not qualify for tax deductions.

Avoid Getting Scammed

Sadly like many things in life there is a down side to donating to charities. There are con-artists who are more than happy to take your charitable donation and use it for their own benefit, making it important to fully investigate the charity prior to committing any money or property for their cause. Find out how long the charity has been operating, if there are complaints reported against them and how much of your money actually goes toward the cause versus administrative and other costs. By taking the time to research the charity you reduce the chances of donating money to an illegitimate organization.