In difficult times for the economy, taxpayers who donate money to needy families are to be commended for their generosity. But although your donations can make you feel good about helping the less fortunate, you must adhere to the guidelines of donation of the service tax if you want to qualify for a deduction from tax on your statement.
No deduction is not allowed
Gifts in the form of donations be made to a qualified charitable organization so that they can be labeled as tax-deductible. The tax service provides that a taxpayer cannot deduct a contribution to specific individuals, no matter what so needy they are. In other words, do not donate money to your Aunt Betty with the intention of write down it as a deduction – even if you need funds for his kidney transplant. You cannot donate USD$ 1,000 a family needed for your home or clothing and deduct them from taxes, nor can give$ 2,000 to your grandson to a new car and expected to write down the gift as a deduction.
Tax service (IRS) is emphatic in terms of the types of charitable organizations that qualify for tax deductions. The Organization must be non-profit, but this is not the only requirement. An organization must request and receive a tax-exempt 501 © (3) of the State Treasury, which could lose if the organization does not provide its annual reports for three consecutive years. Moreover, the Organization must engage in educational, religious, charitable, scientific and literary activities to categorize in this special tax status. Payments to anyone, whether they are your own family or complete strangers, are not deductible.
Deduct a bad loan
If you lend money to a member of your family or another individual with the intent to retrieve it, you may be able to claim a deduction from tax debt if they don’t pay it. The IRS allows not recovered debts that are not commercial in Annex D, Form 1040 as you can demonstrate that you put a reasonable attention to the debt collection and debt is useless. There is one further requirement: you can deduct debt only if the money that you lent him report as income.
Points to consider
The Organization nonprofit 501 (c) (3) should provide you with a receipt for your contributions, you will use when you detail your deductions on Form 1040 of your IRS tax returns. If your gift is greater than USD$ 5,000, you must fill out form 8283 and include it on your tax return.