It’s hard to duplicate the good vibes that you get when you do something charitable. However, that feeling can be squashed a bit come tax time when you realize that you don’t have the proper documentation for the cash you so generously donated to a cause that is near and dear to your heart. The same goes for physical items that you part with in the name of charity. Each dollar and every item should be documented. That documentation is your key to charitable tax deductions.
The exercise of receiving the documentation for your donations is often times very easy. For example, if you make a cash donation to an organization, they will mail you a receipt of the donation for your records. Be careful not to mistake it for general mail from the organization and mistakenly throw it away. If you make the donation online, don’t travel away from the organization’s site without printing your receipt. When you donate physical items to a charity (clothing, household items, etc.) obtaining documentation of your kindness is simple to do. The drop off location for the organization will have staff members on-hand to receive your donation and give you a written receipt right there on the spot. Should you donate at a drop off location that is not manned by staff or volunteers, look for a number to call or a website to visit on the drop off box and reach out to have a receipt sent your way. Any and all donations must go to a qualifying charitable organization and the written acknowledgement they provide should include the name of the charity, the date of the contribution, a description of the contributed item(s) if a non-cash contribution, the amount of the contribution and a statement that no goods or services were provided by the organization in return for the contribution, if that was the case.
In the case of cash donations, you must have written acknowledgement from a charity for any single contribution of $250 or more. If your cash donation is below the $250 threshold, your record of this donation can be shown in the form of a bank record such as a cancelled check. It is important to remember that deductions are not given for donations made to political groups, social groups and individuals.
The value of the items you donate and/or the amount of money you give to a charity comes into play at tax time. If you claim a deduction of more than $500 in donated property, your accountant will work with you to fill out a Form 8283 to submit with your return.
No matter how often or how you give to charity, keep all of your donation documentation in a safe place. A folder in a desk or a filing cabinet is always a good idea. That way, come tax time, you simply have to pull it out and hand it over to your accountant.
We would be happy to assist you with identifying deductions you could be eligible for as they relate to your charitable giving habits. Contact us today.