Year-End Charitable Giving Tips
Did you know that Dec. 2 is Giving Tuesday?
This tradition, which is only starting its third year, is aimed at celebrating generosity and encouraging people around the globe to give back to society on Dec. 2.
After spending money on Black Friday and Cyber Monday, charities hope Giving Tuesday will inspire individuals to dig into their wallets for tremendous causes.
If you want to boost your charitable contributions before the end of the year, which is by far the most popular time to give, you’ll find some tips below. Keep in mind that only taxpayers who itemize their deductions on IRS Form 1040 can claim deductions for charitable contributions.
Know when last-minute contributions count.
If a donation is charged to a credit card before the end of 2014, even if the bill isn’t paid until 2015, the donation still counts for this year. Checks also count as contributions for this year as long as they are mailed in 2014.
Understand the rules for vehicle donations.
The rules when giving motor vehicles, boats or airplanes to charities used to be much more generous for the donors. In the past, taxpayers were able to claim the fair market value of the donation. Today, however, the value of these donations is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. IRS Form 1098-C or a similar statement must be provided to the donor by the organization after the sale and attached to the donor’s tax return.
When donating non-cash items.
Beyond vehicle donations, the general rule is that you can take the fair market value of the items you are donating. If you could sell a bike on Craigslists for $40, for instance, that would be the deductible amount. Clothing and household items are only deductible if they are in good shape. If the amount of your deductions for all non-cash contributions is over $500, you must completeIRS Form 8283 with the tax return.
Donate to real charities.
Make sure the organization is a charity or other qualified entity or else your donation won’t be tax deductible. You can use the IRS’s Exempt Organization Select Check, a searchable online database, to look for qualified groups. Even if they aren’t in the database, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations.
The records you need.
To deduct any charitable donation of money, taxpayers must have proof that it was made. Evidence that you contributed includes a note from the charity or bank records such as canceled checks and bank and credit card statements with the name of the charity, donated amount and the date. If the donation is $250 or more, the taxpayer must obtain an acknowledgement from the charity.
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