Charitable contribution deductions save taxes for 2015!

by JD Miller on May 7, 2015

JD Miller CPA
The Trusted Financial Planner

Your charitable contributions can do two good things:

  1. Save you taxes.
  2. Support charities and causes that do more good in your Community and the World.

You save taxes when you can deduct the amounts you contribute each year.

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.

You cannot take a deduction for any charitable contribution unless you have a statement from the charity with these words:

No goods or services were provided by (the organization) in return for your contribution.

Here are some reminders of what records you must have and must keep to take a charitable contribution deduction on your 2014 tax returns.

Remember, 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 you don’t pay your credit card bill until 2016.
  2. Checks count for 2015 as long as you mail them in 2015.

Cash contributions will always be suspect. You must have a receipt from the charity acknowledging your cash contribution. Protect yourself. Minimize the doubt. Write a check for your charitable contribution. Your cancelled check is evidence that the organization received the money.

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

Only donations to qualified organizations are tax-deductible.

Donations just because you want to help someone aren’t deductible.  For example, your neighbor had a fire in their home and you gave them some money because you wanted to help them get back on their feet.  Many people consider that a “donation”.  Such a “donation” is not deductible on your return.

Qualified organizations generally give you a receipt with their qualifying information. Be sure that the receipt the organization gives you has the following acknowledgment on it:  “No goods or services were provided by (the organization) in return for your contribution.”

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 must itemize your deductions on your tax return .

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.

A quick and easy way to make a record of the property you donated and its condition is to 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 your tax records. This isn’t a guarantee that the IRS will allow a deduction for these items, but records like this could protect you from penalties.

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

What if you donate your car, truck, motorcycle or your boat or airplane –to a charity?

The amount of the deduction is generally 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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