There is something about the holidays and end of the year celebrations that make people want to give and be more charitable. If you find yourself in the mood for charity this season, you should be aware that there are some ways you can give and get back a little at the same time. Here are some charitable gift tax tips to reward you for your generous spirit!
Tax Tips for Charitable Contributions
While we believe in giving year-round and out of the kindness of our hearts, it doesn’t hurt to be financially savvy about our charitable contributions! With that in mind, we have gathered some suggestions for year-end gifts to charities below.
Not All Donations Need to Be Cash
For starters, not all donations to charitable causes need to be in the form of cash. You can donate money of course, but the IRS allows you to deduct other items, including furniture, furnishing, linens, appliances, electronics, household items, and clothing, so long as they are in good condition. For items valued over $500, condition is not as much an issue so long as you include a qualified appraisal of the object along with your tax return.
You can also make donations via credit card or purchase charitable items via credit card, even if you do not pay off the amount you charged on your credit card in the calendar year. Similarly, checks written and mailed in 2014 still count, even if they are not cashed until 2015.
Each time you donate to a charitable cause, be sure to get a receipt. For items valued over $250, this receipt comes in the form of an acknowledgement from a charity, and you must have one for each donation – no matter if it is monetary or in the form of an item or goods. You should also keep receipts from smaller donations as well, as all those small donations tend to add up by the end of the year.
If you make monetary donations to charities – including those made by cash, check, electronic funds, payroll deductions, credit cards, and so forth – you will need a bank record and, preferably, a note from the charity receiving the contribution. The note must show how much you donated, the date, and the name of the charitable organization.
Bank records can include canceled checks and statements from your bank, credit card company, or credit union. For payroll deductions you will need a copy of your pay stub or a document from your employer showing the deduction (including the amount and the name of the charity).
Not All Charities Qualify
Believe it or not, the IRS does not accept all charities as “qualifying charities” when it comes to tax deductions. That does not mean you should not give to those organizations if you believe in them – it just means you will not be able to claim them when you file your taxes.
The IRS has a special tool called the Select Check Tool (http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check) that you can use to see if an organization qualifies. In addition, the following institutions all qualify, even if they are not listed by the IRS: churches (including synagogues, temples, and mosques) and government agencies as well.