The Internal Revenue Service reminds taxpayers looking to maximize their tax
savings before the end of the year to consider charitable giving. Many
taxpayers may already be planning on doing so for #GivingTuesday on Nov. 28.
Giving money or goods to a tax-exempt charity before Dec. 31 can usually be
deducted on that year’s federal income tax return. Taxpayers are urged to consider
the following before donating:
Only Donations to Eligible
Organizations are Tax-Deductible.
The IRS Select
Check tool on IRS.gov is a searchable online database that lists most
eligible charitable organizations. Churches, synagogues, temples, mosques and
government agencies are eligible to receive deductible donations, even if they
are not listed in this database.
Itemize to Claim
Charitable Donations
Charitable deductions are not available to individuals who choose the
standard deduction. Only taxpayers who itemize using Form
1040 Schedule A can claim deductions for charitable contributions. Tax
preparation software usually alerts taxpayers to the tax savings options
available if itemized deductions exceed the standard deduction. The IRS.gov
website can help you answer the question, “Should
I itemize?”
Get Proof of Monetary
Donations
A bank record or a written
statement from the charity is needed to prove the amount and date of any
donation of money. Money donations can include various forms apart from cash
such as check, electronic funds transfer, credit card and payroll deduction.
Taxpayers using payroll deductions should retain a pay stub, a Form W-2 wage
statement or other proof showing the total amount withheld for charity, along
with the pledge card showing the name of the charity.
Donating Property
For donations of clothing and other household items the deduction amount is
normally limited to the item’s fair market value. Clothing and household items
must be in good or better condition to be tax-deductible. A clothing or
household item for which a taxpayer claims a deduction of over $500 does not
have to meet this standard if the taxpayer includes a qualified appraisal of
the item with their tax return.
Donors must get a written
acknowledgement from the charity for all gifts worth $250 or more. It must
include, among other things, a description of the items contributed. Special
rules apply to cars,
boats and other types of property donations. The IRS.gov website has
information to help you determine
the value of donated property.
Note Any Benefit in
Return
Donors who get something in
return for their donation may have to reduce their deduction. Benefits can
include merchandise, meals, tickets to an event or other goods and services. A
donation acknowledgment must state whether the organization provided any goods
or services in exchange for the gift along with a description and estimated
value of those goods or services.
Older IRA Owners Have
a Different Way to Give
IRA owners age 70½ or older can transfer up to $100,000 per year to an
eligible charity tax-free. The transfer can count as their required minimum
distribution for the year. Funds must be transferred directly by the IRA
trustee to the eligible charity. For details, see Publication
590-B.
Good Records
The type
of records a taxpayer needs to keep depends on the amount and type of the
donation. An additional reporting form is required for many property donations
and an appraisal is often required for larger donations of property. Visit
IRS.gov for more information.
Additional IRS
Resources:
- Tax
Information for Contributors
- Publication
526, Charitable Contributions
- Can
I Deduct My Charitable Contributions?
No comments:
Post a Comment