Charitable giving is important all year 'round, but it's often this time of year when we receive the vast majority of solicitations. Why? Well, charities know that if you're in the position to itemize, you may be looking for a few more deductions to offset some gains and bring your entire tax bill down.
Whether you're considering an end-of-year donation for tax purposes or have been giving all throughout the year, there are a few basic things to keep in mind:
Only gifts to qualified (tax-exempt) charities are deductible. Generally, religious organizations and government agencies are tax-exempt. If you're giving to another charity, you can find out whether they qualify by using the IRS's Exempt Organizations Select Check tool.
If you give money, you need a receipt (or other appropriate documentation). According to the IRS, in order for a monetary gift of any size or type to be deductible, you will need to provide either a dated statement from the charity listing the amount contributed or an equivalent bank record. Each individual donation of$250 or more that you intend to deduct should be accompanied by a statement from the charity -- a bank record is not sufficient.
Giving via payroll deduction? If so, you should retain your final pay stub or W-2 listing the full amount withheld and your pledge card listing the charity.
Donations of items are deductible if they are in good used condition or have been appraised. If the items -- household goods, clothing, electronics, etc. -- are worth more than $500, you should include your qualified appraisal with your tax return.
Donations of cars, boats and airplanes to charity trigger different rules.
You can't move your gift into the next tax year merely by putting off the bill. If they qualify, charitable gifts are deductible the year they are made, and the IRS interprets this as meaning the year you charged your credit card or mailed your check, not when you paid the bill or when the check was cashed.
The great news is that there's still time to offset some income with charitable donations this year. With a little planning and good advice, you can make the most of your ability to give.
Source: IRS Special Edition Tax Tip 2014-23, "Six IRS Tips for Year-End Gifts to Charity," Nov. 17, 2014