A donation is a gift. A (tax) deduction is variable tax dollars subtracted, (or deducted), from ones gross income.
Rules to Know…helping others helps you
- You must have a receipt for all cash donations for it to be deductable. Cancelled checks, bank records or a receipt from the charity are accepted.
- Any cumulative donation over the year that is more than $250 must have a receipt.
- Contributions to individuals, political organizations/candidates are not deductable
- The value of your time or service is not deductable
- Money paid for raffle tickets, playing bingo or other gambling activities is not deductable
- Contributions that entitle you to merchandise, goods or services – such as a thank you gift for your donation – is not deductable
- Admission to charity events (banquets, performances or sport activities) are not deductable. Only the portion above fair market value can be deducted.
- A donation must be made to a charitable organization recognized by the IRS as a 501(c)(3).
- Non-Cash Donations
- Household items (such as: clothing, furniture, appliances) can be deducted as long as they are in good condition or better. Make sure to write out a list of the items and include a description including their condition (new/still in original packaging, like new, good/fair, excellent). You must have a receipt from the receiving charity with your inventory list. Some like to take photograph of the items for added documentation
- Any donated item valued above $500 must have an appraisal, and if your donations total greater than $5,000 for the year.
- Donations valued over $500 but not over $5,000 must additionally have information on when and how you came to own the item.
- Purchasing items such as food goods and school supplies are considered “near-cash” donations and much have a receipt for their purchase and a letter acknowledging their donation.
- If you donate stock (appreciated in value) to charity, you do not pay capital gains; you receive a deduction for the shares’ fair market value at the time the gift is made.
So many rules to remember, and all you really wanted to do was clean out your closets and be able to park your car in the garage once more.
Photo credit: https://www.flickr.com/photos/fhwrdh/4551794085
