As we head into Christmas, a few reminders for charitable contributions. It doesn’t matter if you are giving as part of a holiday contribution program or for tax reasons; you need to do it correctly to prevent future problems.
- Make sure that the organization to which you are contributing is an authorized organization. You can check on the IRS web site. If the organization you want to contribute to isn’t listed, check and see if they are working under another tax deductible organization’s umbrella. Not being listed doesn’t mean that they aren’t a good organization doing good work. You just can’t deduct your contributions to them on your tax return.
- All the small gifts you make, like cash into the Salvation Army bucket, won’t be deductible unless you write them a check or get a receipt. You may have the best intentions but there is no deduction without some documentation.
- If you give more than $250, you have to have a contemporary receipt. Your check is not enough to prove your deduction. Also, make sure that your receipt has the correct date and lists any good and services you received as part of the contribution. You are only allowed to deduct the amount of the contribution less the value of the goods and services received. Even if the tax deductible organization doesn’t give you anything in return for your contribution, their receipt must say that in order to be acceptable to the IRS.
- Get the receipt at the time you make the contribution. The IRS won’t accept one written later.
- If you are giving goods, follow the special rules for those. Make of list of everything you are contribution as you put your donation together. Once you know what you are dropping off, you can calculate the value using one of the contribution value lists. And do get a receipt from the receiving organization to document that you did give the goods. Just staple this to your inventory and pricing and put with you tax records. Salvation Army List. Goodwill (downloads).
- There are some non-cash donations, like cars or art, which have special rules. Make sure you follow them. Get independent appraisals for large ticket contributions and anything appreciable.
Helping a charity is a good feeling but if you also want the good feeling of saving on your taxes, you need to follow the IRS’s rules on documentation.