As the end of the year approaches, it's time to take advantage of your last chance to claim charitable deductions. Below are some end of the year charitable deduction tips that should keep you out of trouble with the IRS.
Always get a receipt: Always get a receipt for anything you donate. No excuses.
Make sure your receipt has the right information:
If you make a donation of cash (or cash equivalent) you need to make sure your receipt from the charitable organization has:
• The charity name
• The date the donation was given
• The charity's location
• A detailed description of the property donated
What if they don't offer a receipt?
Ask for a receipt anyway. The charity is obligated to give you a receipt if you are donated cash or items to them. The IRS isn't going to buy your "the charity didn't offer me a receipt" excuse. Do your due diligence and make sure the charity provides you with this important validation.
Keep GOOD tax records and receipts
Scan and copy your records for prosperity. Keep your records filed away in a "charitable deductions" folder or file. You want these files to be accessible and importantly, readable, in the event of an audit.
Be Specific with Charitable Deductions
The Tax Court will not be amused if you stretch the truth about what you've donated. Don't be vague and do not self-assign estimates of the value of items you donate. It's especially important to estimate the proper value of items donated if they're worth a lot of money.
Always Side with Caution
The bottom line: be honest and keep your receipts to avoid IRS issues. If you exaggerate or bend the truth, the IRS will find out. Err on the side of caution and you can prevent big trouble from small mistakes when it comes to charitable deductions.
