6 tax tips for charitable contributions
As we are approaching the end of the year and close to the holiday season, many business owners and individuals donate money, gifts or other tangible items to charitable organizations. One of the very frequently asked questions are:
- What are the record keeping requirements for both donating items and money?
- What is deductible as charitable contributions?
So, to assist businesses and individuals, we have created this quick list that you may find useful for the upcoming holiday donations/contributions to charity.
- Record keeping basics :
- Keep a copy of bank statement that shows a donation made by check or electronic payment.
- If you made cash contribution, request the charitable organization to provide you with a receipt clearly stating amount, date and your name/your business name.
- For additional documentation, you can also keep copies of pictures of items donated etc.
- Single deductible donations of $250 or more. Following additional rules apply and one of the following should be provided to claim the deduction.1.
- Individuals or businesses require separate acknowledgment from the charitable organization with date, the amount of every single donation over $250.
- They can also provide one single acknowledgment that provides a list of each contribution in excess of $250.
- Charitable gifts exceeding $500 e.g.: used cars, equipment: If you donate items in excess of this amount, you are required to complete an additional form 8283.
- Qualified charities: You can only deduct gifts or money contributed to a qualified charity. IRS has issued a select check tool which you can verify to see if your organization is For easy reference, below is the link to the select check tool Check for qualified exempt organizations. You can also contribute to temples, churches, mosques, synagogues etc. even if it is not listed in the qualified charities tool.
- Charitable contributions made by credit card: You can deduct the charitable contribution if it was charged to your credit card prior to the year-end. This applies even if the card was not paid until next year. E.g.: You paid $500 on December 31st but paid the card balance only on January 2nd. You are eligible to take this deduction. Applies to check that was mailed out before December 31st of the financial year.
- Household items should be in good condition: Any items donated like furniture, computers, lawn mowers etc. should be in good working condition.
We hope you find this article useful. Please provide us your feedback via our web form.
Posted In: Tax