DEDUCTING CHARITABLE CONTRIBUTIONS
For money or property to be deductible, you must give it to religious organizations, nonprofit schools, public charities, or other groups recognized by the IRS. You cannot deduct contributions made to individuals, dues, tuition, or the value of your time or services. If you receive goods or services in exchange for your contribution, you may deduct only the amount that exceeds their fair market value. In most cases, the charity provides a letter that specifies the value of the goods received.
You may deduct cash donations if you keep either a canceled check or written acknowledgment from the charity that documents the amount and date of the contribution. Many taxpayers overlook charitable contributions as itemized deductions because they fail to review their checkbook register for payments made during the year. Spending a few minutes reviewing your records can reduce the time spent searching bank statements for canceled checks.
Good recordkeeping throughout the year helps you maximize deductions at tax time. Although leaving noncash donations, such as clothing, household items, books, and furniture, at an unattended drop site may feel convenient, handing the items directly to a representative often supports a larger deduction. When you donate noncash items to the Salvation Army, Goodwill Industries, or similar organizations, create a detailed list of each item for your records. Then assign a value to each item using a recognized valuation guide. This extra step often increases your allowable deduction and makes the additional effort worthwhile.
Click on the links below to access the valuation guides:
Motor vehicle donation rules now require additional documentation from the charity. You should also review the rules for donating appreciated property carefully with your tax preparer. You may qualify for other specific deduction opportunities that Judy can discuss with you.