It is the season when people give gifts not only to family, but also to charity. The IRS encourages people to give by allowing the amount of those charitable donations to be deductible, however there are certain rules and guidelines on how and what you can give for it to be deductible.
What can you donate?
Not only can you write a check, give stock or gift cash, you can also give your old winter coats or that 18th century painting your great aunt left you in her will. Make sure you have the receipts for the cash with the name of the charity and the amount. For property if you are giving clothing or household items to organizations like the Salvation Army or Goodwill and plan on claiming more than $250 than make sure you get something from the charity describing the items. If it is something of high value (above $500) have a record of appraisal or other document showing current value.
Tips on charitable donations
Verify The Charity- No not all charities are equal. Make sure first that it is a legitimate charity and your charitable donation is going where you intended. Also, even if it is a real charity it may not be eligible for deductible donations, there is tool, Select Check, on the IRS website where you can make sure the organization is qualified.
Deadlines for Giving at Year End – If you gave property this year, it is deductible for this year, even the last minute Goodwill trip on Dec 31. This also applies to monetary charitable donations, as long as you mailed the check by Dec 31 even if not cashed till after the New Year it will still count for the year you put it in the mailbox.
Itemizing your deductions – Remember if you want to deduct those charitable donations, you have to use the 1040 and the Schedule A where you will list all deductions, not only charity, but medical expenses, mortgage interest etc. If you choose to use the standard deduction and or the 1040EZ you cannot itemize and potential tax savings will not be realized.
Have Documentation – As with all things related to taxes, make sure you have back up to prove what you are reporting. Whether it is donating money or a few winter coats make sure you get something from the charity with their name and date, and amount or list of items given. For higher end items have third party statements, like an appraisal showing fair value, to prove the amount of deduction taken.
Don’t think twice about giving to a worthy cause, just make sure you understand the rules and never hesitate to contact us if you have questions or concerns on your potential donation whether it’s a coat, cash, or a car.