Does your donation pass the IRS deductibility test?
Published: December 14, 2013 by Gail Richards, president & CEO
As a year draws to a close, donors and the community can be very generous. Each year the IRS issues annual advice on ensuring your charitable contributions are properly documented in order to help lower your tax bill as you support those causes that are important to you. Keep the following points in mind, but you are encouraged to seek the advice of a professional to confirm the deductibility of a donation.
- Your donation must be made to a qualified charitable organization. You cannot deduct contributions to individuals, political organizations or political candidates.
- Charitable contributions reduce your taxes only if you itemize your deductions.
- 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.
- Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.
- Fair market value is generally the price at which someone can sell the property.
- You must have 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. The written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets the requirement for text donations if it shows this same information.
- To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. This statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.
- You can secure deductions late in the year by donating to a charity by credit card. As long as the charge is posted in December, you can deduct it on your 2013 return, even if you don’t pay the credit card bill until 2014.
Ready to make a year-end donations? We hope you consider JCCF in your plans. Donate online today!
