How to Reduce Tax With Charitable Deductions
- 1). Gather your documentation that proves your donations. For cash donations under $250, you can use a bank statement or voided check. For cash donations of $250 or more or property donations over $500, you must have a receipt from the charity. If you donate property valued at over $5,000, you must have the item appraised.
- 2). Write the sum of your cash donations and property donations on the appropriate lines in the "Gifts to Charity" section. For 2009 taxes, cash donations are listed on line 16 and the property donations on line 17 of Schedule A.
- 3). Fill out form 8283 if any of the items donated is valued at over $500. Items valued between $500 and $5,000 must be documented in Section A, whereas items over $5,000 require you complete of Section B, including a valuation by an appraiser.
- 4). Write the sum of the your cash and goods donations on the Gifts to Charity totals line. For 2009 returns, this is line 19 of Schedule A. This total cannot exceed 50 percent of your adjusted gross income. If it does, you must reduce your deduction but you are allowed to carry over any excess for up to five years.
- 5). Add the value of your total taxable donations and write the result on the "Itemized Deductions" line in the "Tax and Credits" section of the form 1040. For 2009 returns, this is line 40a of your form 1040 to reduce your taxable income.
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