Donations to charity are a big part of the holiday season, but there are a few things to keep in mind if you plan to write off donations on your tax return.
Foremost is that you can only deduct donations to a qualified tax exempt organization. According to Gregg Semanick, an IRS agent based in Somerset, qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals. “Generally, organizations will be able to tell you whether they are tax exempt under the Internal Revenue Code,” Semanick says.
Be sure to keep good records, too. To write off monetary donations, you will need a bank record (canceled checks or a statement), a credit card statement, or a written communication from the charity showing the name of the charity, the date, and the amount of the contribution. Any type of record should show the name of the charity, the date, and amount donated.
Contributions are deductible in the year made, not paid, Semanick says. Donations charged to a credit card in 2010 count for 2010, even if the credit card bill isn’t paid until 2011. Also, checks count for 2010 as long as they are mailed in 2010 and clear shortly thereafter.
To write off property donations, such as clothes, cars, or household items, you will need a receipt from the charity that includes the name of the charity, date of the contribution, and a reasonably detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value, Semanick says.
For items valued at $250 or more you must have a written acknowledgment from the organization. For items valued at $500 or more you must also complete a Form 8283, Non-cash Charitable Contributions, and attach the form to your tax return.