Donation and IRS exempt?

Question

If I donate $1500 to a non-profit org (with Tax ID #). How does the IRS rebate this amount? full or partial? how to decide?

Answer 1

If it's a 501(c)3 organization, you can take a deduction for the amount on your tax return IF you itemize.  If you don't have enough deductions to itemize, you don't get a tax benefit from the donation.

It isn't a rebate of the amount, it's a deduction which means that much of your income isn't taxed.  The tax savings is at most the deduction amount times your tax bracket.  So if you donate $1500 and are in a 15% tax bracket, your tax savings is at most $225 - the rest comes out of your pocket.

Edit:  When you file, you get to subtract something called a standard deduction from your income and not pay tax on that, without proving anything.  If you spent more on allowable deductions than your standard deduction, then you can subtract that total instead, but if you are audited you'd have to prove that you really spent those amounts.  If you are single, your standard deduction for 2008 is $5450.  If you are married filing a joint return, it's twice that, or $10,900 since there are two people.  If your total allowable deductions aren't more than that, then you just take the standard deduction.  State and local taxes are deductibe, not federal.  If you own a home, mortgage interest and real estate taxes are deductible.  Charitable contributions are deductible.  There are other items also, but those are the common ones.

Your tax bracket depends on your taxable income, your income after your deductions and exemptions are subtracted.  Most people who owe taxes are in a 10 or 15% bracket unless you have a pretty high income - then you could be 25% or even more - up to 35% if you make hundreds of thousands of dollars a year.

Answer 2

Charitable donations are itemized, so they can only be taken if you itemize deductions, which is done by filing Schedule A.  Generally, this is done only if your itemized deductions exceed the standard deduction, which is $5350 for a single person in 2007, $10700 for a married couple, and about $8000 for a head of household (an unmarried person with dependents).

The principals areas which can be itemized are: state and local taxes, mortgage interest, property taxes, charitable deductions, and large medical expenses.

Answer 3

You need to look at the the Schedule A form and the instructions to see what kinds of costs you can deduct - taxes, some medical expenses, some job expenses, mortgage interest etc...  see www.irs. gov and look under the forms link.

The standard deduction for a single person was $5,350 for 2007.  For 2008, I believe the amount will be $5,450.

When you prepare your tax return you either itemize your deductions on Schedule A, or you take the standard deduction.  If your itemized deductions are less than the standard deduction, then most people take the standard deduction because it is higher.

If you can itemize your deductions, then donations reduce your taxable income dollar for dollar.  If you have $5,000 mortgage interest, and $3,500 taxes and the $1,500 donation, then your itemized deductions would be $10,000.  If you made $50,000 then you would deduct the $10,000 and your exemption of $3,400 and your taxable income would be $36,600.  Then you would use the tax tables to find your tax on that amount.

If you have no other deductions, then is it better to deduct $1,500 (the donation that you would list on Schedule A) from your income or is it better to deduct $5,450 (the standard deduction) from your income?

Answer 4

Donation deduction is available as itemized deduction. If you do not have any other deductions, you will go for standard deduction, which means you will not get any extra deduction for donation.

Read:  http://taxipay.blogspot.com/2008/05/item...