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Tax Tips for Gifts to Charities

Tax Tips for Gifts to Charities
7/28/2021
It is likely that you make donations to various charities throughout the year. Make sure that you get credit for these donations when Tax Day arrives.

It is likely that you make donations to various charities throughout the year.  Make sure that you get credit for these donations when Tax Day arrives.  Here are a few rules to keep in mind (from IRS Tax Tips) in order to maximize these tax tips for gifts to charity:

Rules for Charitable Contributions of Clothing and Household Items:

Household items include furniture, furnishings, electronics, appliances, and linens. Clothing and household items donated to charity generally must be in good used condition or better to be tax-deductible. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgment from the charity for all gifts worth $250 or more. It must include, among other things, a description of the items contributed.

Guidelines for Monetary Donations:

Scott M. Estill, Attornet, tax, education, IRS, savings, charity
Attorney Scott M. Estill is a nationally-recognized and sought-after tax education speaker. He has spoken at numerous seminars, conferences, and conventions on many different tax-related topics (please see list below) since leaving his position as a Senior Trial Attorney with the IRS in January 1995. He has also appeared on numerous television, radio and web-based interview programs since 1995, speaking on many different tax-related topics.
Over the previous 23 years, Scott has provided thousands of seminar/conference attendees with numerous real-world tax strategies that individuals, business owners, and real estate investors can implement to realize immediate tax savings and plan for the future.

A taxpayer must have a bank record or written statement from the charity in order to deduct any donation of money, regardless of the amount. The record must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, and bank, credit union and credit card statements.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

Other rules and guidelines (again from IRS Tax Tips):

  1. If your goal is a legitimate tax deduction, then you must be giving to a qualified charitable organization. Also, you cannot deduct contributions made to specific individuals, political organizations and/or candidates.
  2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
  3. If you receive a benefit because of your contribution (such as merchandise, tickets to a ball game or other goods and services), then you can deduct only the amount that exceeds the fair market value of the benefit received.
  4. Donations of stock or other non-cash property are usually valued at the fair market value of the property.
  5. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having a reasonable knowledge of all the relevant facts.6. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.
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