Tips for Charity Donations by IRS

It’s the end of the year and Christmas is round the corner. Since it’s the season for giving, many people make their charitable donations around this time of the year. The IRS has issued some tips to help you make your charity donations the correct way so that you are eligible for tax deductions on your donations.

Contributions are deductible according to the historical cost convention. This means the charitable donations are deductible in the tax year the donations were 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 next year. Also, checks count for the current year as long as they are mailed this year.

Do not assume the charity organization is qualified to receive tax-deductible donations. Only donations to qualified organizations are tax-deductible. You should refer to IRS Publication 78, available online and at many public libraries, to check if the organization you wish to donate to is qualified to receive deductible contributions. Alternatively, you can do a search online at the IRS website, under, “Search for Charities.” Bear in mind that churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even though they often are not listed in Publication 78.

You should itemize your deductions on Schedule A in order to claim a deduction for your charitable donations. However, you will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc) exceed the standard deduction. Use Schedule A, available now on to determine whether itemizing is better than claiming the standard deduction.

Obtain written acknowledgement of your charitable donations. If you make cash donations, you should have documentary evidence in the form of bank statements with cancelled checks, credit card or credit union statements or a written acknowledgment from the charitable organization. For donations in kind like property, clothing and household items, you should get a receipt from the charity that shows a 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 a description of the property and its condition.

If you donate a motor vehicle, boat or airplane to charity, the value is usually the gross sales proceeds. This rule applies if the claimed value of the vehicle is more than $500. The charity organization is to give you Form 1098-C, or a similar statement for you to attach to your tax return.

For more information on this matter, check out IRS Publication 526, Charitable Contributions.


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