Is my donation tax-deductible? If you a taxpayer giving to a nonprofit or charity, you should be asking this question. Well, the answer depends on who you donate to, and how much you give overall. Actually, the answer is slightly different depending on whether you’re donating as an individual or as a business.
Fret not since we are here to help clear some of the doubts you might have regarding donation tax deductible. Since everyone’s situation is different, it is in your best interest to always consult a financial advisor for advice specific to your tax situation. Keep reading to uncover.
If at all your itemized deductions will exceed your standard deduction, tax-deductible charitable donations could help lower your tax bill. That leaves many wondering about what makes a donation tax-deductible. Well, tax deductibility depends on where you donate. For a donation tax deductible, the group you give to must be what the IRS refers to a ‘qualified organization.’
Common examples include; churches, temples, mosques, non-profit community organizations and charities that collect and distribute donations. Other key things that make a donation tax-deductible include what you donate, whether you get any benefit in return, and your recordkeeping.
Everyone can donate to nonprofits, but even if your donation qualifies as a tax-deductible contribution, you won[t necessarily see a lower tax bill. That’s because every taxpayer or tax-paying household is granted what’s called a ‘standard deduction.’ Even if you fail to donate a single penny to nonprofits, you can always subtract the standard deduction from your income when calculating the owed tax.
The other category is referred to as ‘itemized deductions.’ This includes charitable donations, qualified medical expenses, mortgage interest and others. Itemized deductions are added up item by item then deducted from the total adjusted gross income (AGI) to reduce your potential tax bill.
There is a lot more you should know before you finally get your donation tax deductible in Singapore. No wonder you’re better off spending some time doing your homework to find answers to some of your burning questions before taking the next step of action.
The good news is you can always enlist professional to avoid leaving room for mistakes while making donations to charity. That’s what you need to maximize your tax-deductible donations without going overboard.