‘Tis the Season to Give – 6 Tips on Deducting Charitable Donations

paper calendar pages flippingAs we move into the end of 2015, many folks are looking at making their final charitable donations for the year. Here are a few tax related tips:

1. The IRS requires written documentation for donations of ANY amount – keep your credit card statements, check copies or electronic transfer confirmations. The documentation should show the name of the charity, the date & the amount. Also, don’t throw away the thank you letter you get after the charity receives your donation as that counts as documentation.

2. For non-cash donations (e.g., furniture, electronics, household items) get a written receipt from the charity that includes a description of the items. If you use a self service type of drop box, make a written record of what you dropped off, the date & charitable organization’s name.

3. Non-cash donations are deductible based on their Fair Market Value, not what you originally paid for the item.

4. Contributions charged to a credit card are generally deductible on the date charged, not the date the credit card is paid. So if you contribute to a charity using your credit card in December, it will count for your 2015 taxes – even if you pay the bill in 2016 (subject to any other limitations on your deductions).

5. If you are getting something of value in return for the donation, it affects the deductible amount for tax purposes. The tax deductible amount is reduced by the value of the item received. The acknowledgment from the charity should detail this for you, but check with your accountant if you aren’t sure how much to deduct.

6. If you rely on your bank to store all the copies of your checks & transfers online for easy access, don’t forget to save them electronically or by printing if you decide to switch banks. Once the account is closed, it’s costly & time consuming to try to retrieve copies of old transactions.

You can find more donation deduction information on the IRS site or ask your accountant.

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