It feels great to donate to charity. And the feeling gets even better when you also get a tax deduction! Follow these 6 tips to ensure your charitable contributions pay off on your tax return.........
1. You must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization or a political candidate
2. You must itemize your deductions.
3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event, or other goods and services.
4. Donations of stock or other non-cash property are usually valued at fair market value. Fair market value is generally the price at which someone can sell the property. Used clothing and household items must be in good condition to be deductible. Special rules apply to vehicle donations. We have created a worksheet that will help you determine the general range of value for your donations. Click here to access our tax worksheets.
5. You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. It should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.
6. To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the cash amount or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.
Let us know if you have any questions we can answer on this, or any other tax topic!