If you’ve ever donated money to charity, then you know how much of a difference it can make for people in need. But if you’re like most people, there’s one thing that might have prevented you from donating more: the idea that your contributions would be taxed at a higher rate than if they had gone toward something else. The good news is that this isn’t the case, and there is even some donation tax relief along with your donations. In this article, we’ll explain how to claim deductions on charitable contributions and why they matter so much when making financial decisions about what matters most: helping those in need.

What to know before claiming tax deductions

●       Make sure your charity is eligible.

If you’re planning on claiming tax deductions on your donations, it’s essential that the charity you donate to is eligible. This can be a challenge because there are so many different organizations out there, and they all seem to be legitimate. But if you want to make sure that you’re getting what you pay for, follow these rules:

Don’t give money to a charity that isn’t registered with the government.

Make sure every single penny donated goes directly towards helping those in need rather than just being spent on salaries or overhead costs.

●       Keep a record of what you give away.

You can claim a tax deduction for the fair market value of your donations. This is known as “the donation receipt”, and it’s essential to keep this document safe because it will be used to calculate your tax deductions later on.

If you are donating something like shoes or clothes, then write down their cost price before giving them away so that you know how much money has been donated by each item sold at charity shops (and not just by individuals).

How to claim the deduction?

For gifts made in the previous year, a tax deduction is granted. A tax deduction, for instance, will be permitted in a person’s tax assessment for the Year of Assessment 2022 if they made a contribution in 2021.

The gift sum does not have to be disclosed on your tax form. Based on the data from the IPC, tax deductions for valid donations will be immediately reflected in your tax assessments.

However, to get a receipt for your donations, you need to provide some details to the charitable group, such as:-

Full name as it appears on the IC, Organization Name, and IC or UEN Number.

Contact Information for Emailing the Tax Receipt.