TIPS FOR CHARITABLE DONATIONS

5 INCOMETAX

DEDUCTIONStephen Overton

Good Documentation

When it comes to the IRS, documentation iskey. Keeping excellent records is essential toproving that you gave exactly the amount you

claimed. Save any receipts, donation letters orthank you cards from the organizations to

which you donated.

If you donated clothing and household items toa charity shop, it is always a good idea to get

photo documentation as well as a receipt. Thiscan be used to confirm the value of your

donation if the need ever arises.

Don’t Overlook Less Obvious Donations

When it comes to tax deductions, every dollarcounts. Do not lose out on these deductions by

neglecting to itemize the less obviousdonations you make each year. When the

cashier at the grocery store asks you to donateto their charity drive, save the receipt for a

write off.

When you donate your time to a charity, thetime you spend is not deductible but any travel

expenses you incur count toward yourdonations. You can also deduct any recurringdonations you make from your paycheck or

subscription donations from eligible charities.

Large Charitable Donations Require MoreDocumentation

When you donate small value items or littlesums of cash, receipts will suffice for proving

the donation. When it comes to largerdonations, be aware that they will come under

more scrutiny and may require additionaldocumentation.

When a donation is above 250 dollars, the IRSrequires detailed descriptions in addition to

receipts, letters of acceptance and any relevantbank statements. A property donation of 5,000dollars or more needs an appraisal completed

by a professional.

Verify an Organization’s Tax Exempt Status

A costly mistake that taxpayers often make iscontributing their cash or property to

organizations that have not obtained taxexempt status. The IRS maintains a list ofapproved charities that are able to accept

deductible donations.

A charitable organization not on this list mayaccept donations, but you will be unable to

legitimately itemize them on your taxes. Beforeyou make a large contribution, ask to see theircertification letter from the IRS. Of course youmay still choose to donate to charities that do

not retain tax exempt status, but be aware thatthey will not count toward your deductions.

Deduct the Value of Donation Gifts

Many charitable organizations will offer a giftas incentive for contributing cash. Taxpayers

often overlook the need to deduct the value ofthe gift from the total donation. For example, ifyou make a small donation to your local publicradio station, you must deduct the value of the

branded tote bag you receive.

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