Charitable contribution deductions can make your retirement more fun!

by JD Miller on May 7, 2015

JD Miller CPA
The Trusted Financial Planner

The less tax you pay, the more money you have to do other things in your life.  One of the things you could do would be to save this money make your retirement years more fun!

If you’re already retired, you still have choices.  You could enjoy spending more, make your heirs richer, or increase the financial legacy you plan to leave at your death.

Deductions that you take on your tax return reduce the tax you must pay.

Deductions must be allowable and supported by your records

To claim a deduction on your tax return, any deduction, the deduction must be allowable and you must have and keep records that support your deduction.  Your records must show you spent the money or donated your property, in the case of a charitable donation of property, in the year you claim your deduction.

These reminders tell you what records you must have and must keep to take a charitable contribution deduction on your 2011 tax returns.

Contributions are deductible in the year you make them.

Here are some examples:

  1. Donations charged to a credit card before the end of 2015 count for 2015. This is true even if the credit card bill isn’t paid until 2016.
  2. Checks count for 2015 as long as they are mailed in 2015.

These records are evidence that you made the contributions in 2015.

Only donations to qualified organizations are tax-deductible.

Qualified organizations generally give you a receipt with their qualifying information.  Check out the organization if you are unsure.

Churches, synagogues, temples, mosques and government agencies are also eligible to receive deductible donations.

You must itemize your deductions on your tax return to take deductions for charitable contributions.

You cannot claim a deduction for charitable contributions if you choose to use the standard deduction, or if you choose to file one of the short forms, Form 1040A or 1040EZ.

What if you donate property, including clothing and household items, to a qualified charity?

Get a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property.

If you leave a donation at a charity’s unattended drop site, obviously you can’t get a receipt.  But you could still get your deduction.  Note where the unattended donation site was, the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property.

For all of your property donations, you must keep a written record of the donation, the fair market value of the property at the time of the donation, and the method you used to determine that value.

Here’s a quick and easy way to make a record of the property you donated and its condition.  Lay out the property at home and take a picture of it.  Then attach the picture to your receipt.

If you dropped your donation off at an unattended site, you might want to take a picture showing the site and your property.  Again, keep these pictures with you tax records.

Additional rules apply for a contribution of property with a fair market value of $250 or more.

You could take a deduction for donating your motor vehicle, boat or airplane to a charity.

The amount of the deduction is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is greater than $500.

You must be given a Form 1098-C, or a similar statement by the charitable organization for your donation.  You attach this form to your tax return.

As always, you must keep good records and receipts.

 

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