In this course, we will cover the following: The tax advantages of charitable giving Forms of donations and their tax consequences How to find the right charity Effectively utilizing trusts Additional Resources: Calculators Worksheets Workbook Glossary Calendar

Giving to your favorite charity is one of the best ways to save on the amount of taxes you owe each year. In this section, we will talk about how to effectively use charitable donations as deductions on your tax report. There are two ways to determine your deductions. Thankfully, though, you get to choose the method that gives you the best solution – whichever way offers you the most deductions. The two methods are the standard deduction and the itemized deduction. In order to use charitable deductions, you must itemize your tax return -- if you use the standard deduction, you may not claim them. To receive your tax deductions, you must follow a number of rules. (2001rules applied) If you give $250 or more in cash or property to a charity, you must get a written receipt from the organization to substantiate your claim. If it is under $250, a receipt or cancelled check is sufficient. If you donate a non-cash gift over $500 to a single organization, you must attach the Form 8283 to your 1040. If it is between $500 and $5000, you need a receipt and the 8283. If you donate enough to one organization to claim a deduction of more than $5,000, you must attach a written appraisal supporting your claim (most major charities can provide you with one.) This applies only to non-securities donations. To deduct the fair market value of donations of clothing, household appliances, furniture, and other goods to charities, you must make sure you keep some documentation. Write up an itemized list and get it signed by the charity. Her Tip: You can also deduct expenses for work you do with charitable organizations. For example, if you work in a hospital, you can deduct transportation costs to get there. You just need to keep track of your bus fares or driving mileage. In fact, traveling costs can represent a significant portion of your charitable deduction. Keep records of your donations It is important that you keep accurate records of any charitable contributions you wish to deduct for tax purposes. No deduction may be allowed for a separate contribution of $250 or more unless you have a written confirmation from the charity. It should include the date of the contribution, the name and address of the charity, the amount of cash you contributed or a description of any property you donated. It must also state the value of any gift or service you might have received. Large property donations For larger value property donations ($500 or greater), you must attach a "Non-cash Charitable Contribution" form to your return. If you contribute property worth more than $500, list on the form the date of your donation, the fair market value of the gift and the name of the charity. If you contribute property valued over $5,000, you need a written appraisal from a professional appraiser who must also sign off on Part III in Section B of the form. The charity must complete and sign Part IV of the same form. Tickets to charitable events If you purchase a ticket to a charitable event, you can deduct only that portion of the ticket price that exceeds the cost of the entertainment. Upon purchase of the ticket, the charity will give you a document that lets you know the dollar value of this amount. The same rule applies if you purchase products sold by a charitable organization. HerTip: A contribution is deductible in the year it is paid. Putting the check in the mail constitutes payment. A contribution made on a credit card is deductible immediately, even if payment to the credit card company is made in a later year. Tax cps It is important to note that the amount you deduct in a given year for charitable contributions may be limited, and depends on the form of payment, and type of charity. Continue to: Part III: Forms of Donations and Their Tax Consequences