Below are some helpful tips to reduce your taxes while helping a well-deserved charitable organization.
- Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of the year count for that year. This is true even if the credit card bill isn’t paid until the next calendar year. Also, checks count for this year as long as they are mailed this year and clear, shortly thereafter.
- Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78 lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in IRS Publication 78.
- For individuals, only taxpayers who itemize their deductions can claim deductions for charitable contributions. This deduction is not available to individuals who use the standard deduction. A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction.
- For all donations of property, including clothing and household items, obtain from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. As I’ve reminded you in the past, additional rules apply for a contribution of $250 or more.
- The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C, or a similar statement, must be provided to you by the organization and attached to your tax return.
- If the amount of your deduction for all non-cash contributions exceeds $500, a properly-completed Form 8283 must be submitted with your tax return.
These are the basic rules for charitable giving. If you have other questions, please don’t hesitate to call my office at 770-575-9737.