#e giving

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While primary motivation to donate to charity should be selfless there are advantageous effect of it is tax exemptions. Since World War I the federal government has introduced the charitable tax deductions to help the charities that were dying due to declining contributions. And since then Americans have used charitable donations to reduce their taxable income. The Internal Revenue Service(IRS) also agrees with this and gives you a tax break for donating. Donations made to charities with necessary qualifications, are considered to be expenses that can be deducted from taxes. This helps in reducing the taxable income hence lowering the tax bill.

Though not every charitable contribution can be subjected to deduction from tax. Priority is to itemize one's tax deduction before claiming any charitable donation. Though World War I introduced charitable contribution deduction, World War II initiated the standard deduction, introducing it in 1944. It for the best interest of the donor that the total of all of his/her itemized deductions exceeds the amount of the standard deduction.

Taxes in America are paid in a tax bracket system and depending upon how much income you have you will fall in one of these brackets. Higher the income is, higher will be the percentage of tax that will be imposed on you by the IRS. By giving part of your income to charity you can reduce your taxes by falling in a lower tax bracket where the tax percentage is less. Thus you will end up giving less than originally that you were supposed to pay.

Here are some cautionary measures for charity donations:

The cost of donation in your taxes is only measured by the tax bracket that your income places you in. Higher the tax bracket, more the percentage, thus lower the worth of your charitable gift. For a person in lowest tax bracket, worth of his contribution is far more than that of a person in higher tax bracket. This helps in encouraging the rich to donate more by reducing their taxes based on their reduced taxable income based on their charitable donations.

Charging your donations on your credit card. The IRS does not care about when you pay back the credit card company as long as it's a concern of tax deduction. The donation amount charged on your credit card can be included in the tax deduction scheme the same year even if you haven't yet paid back to your bank.

Deduction on donation on any property is fairly equal to the market price of the property, given it has been owned by the donor for more than a year. This helps in claiming tax deduction on income not reported.

What happens if you get an appreciation gift back after you donate to an organisation? IRS says that the value of whatever item you get back will be deducted from the value of your donation and then the remaining amount will be subjected to tax deduction.

Not all charity organization are qualified. You can't benefit from tax deduction policy if you are donating to certain organization who are not deemed fit by the IRS to be included as a charitable tax deduction. This majorly has to do with some organisations spending more on propaganda and advertisements rather and less on performing actual charity. Besides that, some private charities and overseas charities are also not included. So choose carefully where you donate.

Check if the charity you are donating to is qualified. And always get a receipt.

Value of your donation. If your contribution is less than 250$ you yourself can evaluate your donations. Or if you are lucky the organisation itself will provide you with an evaluation. But if your donation is worth more than 250$ then you will need appraisals. Higher the value of donation more formal the appraisals get.

There are limits to how much of your income can be exempted from tax deduction. As long as your donation is below 20% of your gross income you don’t need to worry. For public charity donations the tax deduction is limited to 50% of your income. Any excess amount donated won't be include in that year’s tax deduction, but will be forwarded to next five years.

Donation of your time. Though IRS doesn’t recognize this, you can still get tax deduction for the expenses incurred while you were spending time working for a charity. Which include travelling, food and any supplies associated to your service. All these expenses can be deducted from your taxable income.