How to Reduce Your Taxes by Giving to Charity

Many people like to contribute to a good cause. There are many needy organizations that do great work in your community and the contribution may be a deduction on your tax return.

In order to claim charitable contributions, you must itemize your deductions using a Schedule A. Generally, you won't be able to use a Schedule A unless you have a lot of sizeable deductions such as a home mortgage expense or lots of unreimbursed medical expenses. Check with your tax professional about itemizing deductions before making any contributions. (Most organization will tell you that your contribution is deductible, but not everyone will be able to deduct them because of this rule.)

Here are some rules to follow about charitable contributions:

* You can't write off a donation made to your brother-in-law Ed, no matter how much of a charity case or freeloader he is. Contributions can only be made to recognized charitable organizations. That also leaves out political candidates and political organizations. Ask to see the 501(c)(3) status of any organization you doubt.

* Bingo doesn't count. You can't write off anything you spend for bingo or raffles, even when the proceeds go to the church. Games of chance are not considered a donation.

* When you get something in return for your contribution, you must deduct the fair market value of the item from the amount of the donation. Think Girl Scout Cookies. Even though you pay $3.00 for a box of cookies, you must deduct the amount you would pay for a box of similar cookies at the grocery store. (I know there's no comparison to the Thin Mints, but that's the rule!)

* If you donate more than $250, you must get a receipt to prove your claim.

* When you donate personal items (like clothing or kitchen appliances) to an organization like Good Will or the Salvation Army, you can only deduct the thirft store value - essentially, the price a thrift store can charge for the item - not the value of the item, no matter how valuable.

* There are different rules you must follow as the amount of your contribution goes up. Check with your tax professional to make sure you complete all the required paperwork.