If you are looking to make contributions to charity during the holiday season, it’s important to keep in mind certain rules regarding donations to lower your tax bill. The first rule for claiming deductions on charitable donations is that you must itemize your deductions. Even if you used standard deductions when filing taxes for 2013, you can itemize your deductions for 2014.
Check if it is a qualified charity: You can only deduct contributions to qualified charities. To confirm that a charity is recognized, you may use this IRS tool. Along with charities, you may also deduct donations made to churches, synagogues, temples, mosques and government agencies.
Make sure you have written record of the donation: You may have made your contribution in cash, by check, credit card, payroll deduction or wire transfer. Whichever method you used to pay, you need to have written document (which can be a bank statement, credit card statement, etc.) with the following information:
- The name of the charity
- The date, and
- The amount of the contribution.
If you have used payroll deduction to make your contribution, then you need to retain a pay stub, a Form W-2 wage statement, or documentation from your employer. The document must have the amount of the contribution and the pledge card with the name of the charity.
Donating used items: If you donate clothing, furniture, electronic appliances, and other household items, you can only claim them on your return if the item(s) donated are in good condition. If you include a qualified appraisal of an item for which you claim over $500 in deduction with your return, then this rule does not apply.
You need to have written documentation for each of the charitable contribution you make. A statement with the required details of multiple contributions will also suffice.
Labels: IRS, Tax Deductions, Tax Filing, Tax News, Taxpayers