IRS Rules on Deducting Charitable Giving

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Every year people give away billions in money and items to charities. This giving helps people in need. There are tax benefits that can come with that giving. To help provide guidance on that giving, the IRS has guidelines. Here are the guidelines:

Rules for Charitable Contributions of Clothing and Household Items

To be tax-deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more that includes, among other things, a description of the items contributed. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

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What to Do with Extra Money

s127460621275509906_p4_i1_w240For many people saving on a regular basis can be difficult. Typically, the challenge to saving rests in the fact that there is little or no disposable income to use. Everything goes toward paying bills.

Don’t Pay Bills and Waste the Rest

For many however, saving can be part of their daily life. Unfortunately, they may not think about doing it. They would rather spend any extra money on indulgence.  In most cases, the indulgences don’t last long and can’t help in the future. Meanwhile, any extra money that is saved can help in the future with any number of challenges. The money in essence works for the saver.

In this case the best way to save on a regular basis is to do it paycheck by paycheck. Setting the process up that way causes the saver to look at the extra money as a bill.

With it, they can look to deposit the money into any number of accounts. They can put the money into something conservative or they can put it into something risky. They can even do a moderate mixture of both. A little conservative and a little risky.

Give Money to Charity

Along with other options, giving to a charity can be a great way to handle extra money. There are many organizations both locally and internationally for people to give to.  Each organization can benefit greatly from the goodwill and extra spending ability that donors may have.

Reward Yourself for Hard Work

Spending the extra money on one’s self can also be a good reward for a job well done. Many times it can serve as an incentive or even a motivator for doing more in the future. The trick is to not let it get out of hand.

When it comes to handling extra money made from work, the key is to not only look at the short term immediate need but to also look at what the money can do in the short, medium and long term. If it’s balanced the right way, it can take care of any number of needs including a little self indulgence.

 

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