If you are planning on contributing to charities before the end of the year, remember that the IRS needs those deductions itemized on your tax returns in order to claim the deduction. These tips can help you when making year-end gifts to charity.
Tip #1 – Find and Give to a Qualified Charity.
Be sure the charity is a “qualified charity” before you give your donation. Churches, synagogues, temples, mosques and government agencies are considered a qualified charity. Visit the IRS’ website to find a list of qualified charities. The Select Check tool will help you determine if the charity you were planning on donating to would give you the tax benefit you are hoping to attain.
Tip #2 – Give Money.
In order to use charitable donations as a tax benefit, proof needs to be obtained. Giving by check, electronic funds transfer, credit card or payroll deduction leaves a paper trail that can be used when filing your taxes. A bank record of a cancelled check, bank statement or credit card statement can be used. The charity may also provide a written document listing its name, the date you gave and the amount you gave. If you give by payroll deduction, your pay stub(s), W-2, or another document from your employer with the total withheld and a pledge card that displays the name of the charity you are giving to, is needed.
Tip#3 – Give Things.
A tax deduction can also be taken if you donate gently used things. The charity can provide a receipt with the name of the organization, date of donation and description of items for you to use when claiming the tax deduction. Many different things can be donated including household items like furniture, furnishings, electronics, appliances, and linens. Shirts, blouses, pants, skirts, shorts, shoes and jackets can also be donated.
Tip #4 – Give Before Year-End.
The donations made in this tax year are deductible on this year’s tax return. Checks need to be postmarked in the year you are wanting the deduction, even if they have not been cashed by the charity yet. Donations by credit card donations charged within the year are counted for that year even if the bill is not paid until the following year.
Tip #5 – Keep Detailed Records.
Be sure to keep detailed and accurate records of all gifts to charity you make. Keep a list of dates, descriptions of donations, names and address of the charity, fair market value of items donated, and how you determined the value of the item. If the donation is valued at $250 or more, whether cash or items, you need a document for the charity organization. Donations of automobiles, boats and airplanes have special rules in which you can find on the IRS website.
Have Questions About Deducting Charitable Gifts?
Call our office with any questions you have about charitable donations. We would love to schedule a convenient time to discuss those questions.