Sometimes, it truly is better to give than to receive, especially when tax time rolls around and you’re looking for ways to reduce your reported income. The more generous you are, up to a point, the bigger your deduction, and the lower your tax obligation.

The drawbacks are few: You need to itemize your deductions instead of claiming the standard deduction, and you must document your charitable contributions. With the IRS gearing up to take a closer look at tax returns — especially those of high-income individuals — keeping detailed documentation is more important than ever.

In this post, we offer some general guidance on claiming deductions for charitable contributions. We also provide detailed guidance on how to document those contributions to maximize your tax benefits and get something back for your generous philanthropic efforts.

Choose Eligible Charities

The first step to claim deductions for charitable contributions is to donate to organizations that have a legitimate tax-exempt status. Only donations made to eligible nonprofit organizations, such as registered charities, religious organizations, educational institutions, and certain foundations, can be claimed as deductions on your tax return.

The IRS maintains a searchable database of qualified organizations on its website. Before donating to an organization, you can check to see whether it’s in the IRS database of tax-exempt organizations. Use the Internal Revenue Service’s (IRS’s) Tax-Exempt Organization Search tool at apps.irs.gov/app/eos.

Keep Detailed Records

Maintaining accurate records is essential when claiming deductions for charitable contributions.

Warning: When you donate, don’t forget to ask for a receipt or acknowledgment letter from the charity, which should include the charity’s name, the date of the donation, and the amount donated. These records are crucial when you file your tax return and need to prove your deductions.

Specific documentation requirements are as follows: Continue reading… Continue reading… Continue reading…