Paperwork, documentation and receipts are key to deducting charitable contributions.
It doesn’t get more win-win than charitable giving. The altruistic donor supports causes in which he or she is passionate, and they stand to benefit at tax-time.
A contribution to a qualified charity is deductible in the year in which it is paid, whether the payment is made by check or credit card. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
Most charitable organizations qualify for a charitable contribution deduction. To identify a tax-exempt organization, log on to the IRS website homepage (www.irs.gov) and enter “Publication 78” in the search bar. Click on “exempt Organizations Select Check Search Tool.”
According to Charity Navigator, other charitable organizations also include:
- Churches and other religious organizations
- Tax-exempt educational organizations
- Tax-exempt hospitals and certain medical research organizations
- A private operating foundation which pools all of its donations in a common fund
- Certain membership organizations that rely on the general public for more than one-third of their contributions
- Certain private foundations that distribute all contributions they receive to public charities within two-and-a-half months after the end of the foundation’s fiscal year
- Publicly supported organizations such as a community chest
You cannot deduct contributions made to specific individuals, political organizations and candidates, the Internal Revenue Service notes.
Paperwork, documentation and receipts are key to deducting charitable contributions. Regardless of the amount, to deduct a contribution of cash, check or other monetary gifts, the donor must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution, according to the IRS. For text message donations, a telephone bill will meet the record-keeping requirement if it documents the receiving organization’s name, the date of the contribution and the amount given.
In donating clothing and household items such as furniture, electronics, appliances and linens, they generally must be in at least good condition to claim a tax deduction. This standard does not apply if you claim a deduction of more than $500 for an item. But the donor needs to include a qualified appraisal of the item with their tax return.
Time spent working with a charitable organization is time well spent, but that doesn’t mean your personal services are deductible. However, out-of-pocket expenses on behalf of the organization, such as transportation, parking, meals or lodging are deductible.
Donors who receive a gift item in return for their contribution should be sure to deduct that value of that gift from their donation.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.