Tax Tips for Year-End Gifts to Charity
It is not uncommon for people to start thinking about donations and charities around the holiday season. But to benefit from those donations and claim them as a tax deduction means you must itemize your deductions on your tax return. That leads to some tips and considerations to keep in mind before donating.
Firstly, you can only deduct donations made to a qualified charity. You can check if it is a qualified charity by using the IRS Select Tool. Things that may not be in the IRS Select Check but are still always deductible are churches, synagogues, temples, mosques, and government agencies.
Gifts of money are cash, check, electronic funds transfer, credit card, or payroll deductions. To deduct any gift of money regardless of the amount given, you must get a record of written statement from the charity. The record must include the name of the charity, the date donated, and the amount given. If the donation was through a payroll deduction, you should get a pay stub, Form W-2, or some documentation that shows the total amount withheld for charity and a pledge card showing the charity name.
Any household items that are donated like furniture, electronics, or clothes generally must be in good condition to be written off as a tax deduction. However, if you claim a deduction of greater than $500 for an item and include a qualified appraisal of it in the tax return, then it does not have to meet a condition requirement.
If you donate $250 or more to a single charity you must get an acknowledgment from the charity. This is in addition to the records needed for gifts of money. Lastly, any donations made in the year you donate you can deduct for that year. If you write a check or donate on a credit card in December of the calendar year. But do not pay the credit card bill or the charity does not cash the check until the following year, you can still deduct it for the year charged on your credit card.
If you would like to learn more or to set up a consultation call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.
The above information is of a general nature only and should not be relied upon for specific situations.
