We have been talking about tax credits the tips and tricks and where to donate and where not, to deal with the tax benefits provided by the governments on your donated amounts. However here we will review something ahead of these tips and tricks list. Let’s just find out the ways you can claim about your tax credits on the donated amount, including the receipts and else. Here we will also assist you how to make donation through your payrolls.
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How to Claim Tax Credits
When Can You Claim a Tax Credit?
The answer to this question is really very simple of your are making a donation as that of the minimum amount set by the rules, and you own a valid receipt of the donation you have made, you can claim fro your tax credit by the end of each tax year.
What You Need to Show?
This is all about the list of documents you will need to have while dealing with the tax credit application and earning benefits out of your donations. If you are donating to an organization, you might be having the following set of documents from them in order to ensure that are eligible for tax deduction by end of the year:
- The date of issuance of the receipt
- Full name of the donor
- The amount donated on that particular date
- Confirmation of the receiving of the payment with signature of the donor and an authorized person from the receiving organization
- Getting an official stamp on the receipt form the organization (this can only be applied if the donation is listed on/ printed on an official letterhead of the receiving organization)
- The registered name and registration number of the organization on the receipt
Making a Donation by Phone:
If you are making a donation by phone, you will again be in need of receipt of the donations made, by end of the year. Remember, you cannot use the phone bills or the call details as a receipt as it does not provide the proof of the above listed information. In case you are making a donation through payroll, you will be dealing with somewhat different rules:
How to Calculate Charitable Tax Credits:
Determining the eligibility amount is the most important thing while dealing with the calculation of charitable tax credits. For this purpose, you need to determine or understand which organization can offer you, official donation receipt and what the gifts that qualify the tax deduction are. Once you are done with the understanding, it’s the time to calculate the net amount of donation you are about to claim. For a single year, you can claim:
- Donation from 31st of December till the end of the tax year
- Unclaimed donation that is made in last 5 years
- Any kind of unclaimed donation made by your spouse or a legal partner in the time of last 5 years
Furthermore, you can claim for gift, if it is around 75% of your total income. If you have gifted any certified property or something to ecologically sensitive piece of land, you can claim for 100% of your total income. Once you have calculated the amount you can use the government provided tax credit table to calculate the amount you can claim.
It talks about the non-refundable tax credit. To the fact, it can only be used to reduce the owned tax, if you do not own any kind of tax; you are not eligible to get any kind of refund. In this way the tax saving you have made will be equal to the amount of the calculated charitable tax. Below is the list of exceptions:
- If you have made a donation to the traded securities and you can increase your saving by decreasing the tax capital gains
- If you need to pay the provincial income