As we near the bustle of holiday season shopping and cheer, the feelings of good will towards man and year-end tax deductions translate into the busy season for charity donations. Every store seems to have someone out front with a bucket and a bell asking for spare change to help a specific cause.
If you’re donating to a cause out of the goodness of your heart, please make sure you’re giving to a reputable entity: ask for a charity’s public 501(c)(3) or number or visit charitynavigator.org for ratings of thousands of charities. If you’re hoping to use your good will to lighten your load come tax time, you have to be a bit more intentional in where and how you give. To learn whether (and what percentage of) your donation is tax deductible, visit the IRS Tax Exempt Organization Search.
You may know that cash donations greater than $250 must have an acknowledgement from the charity with the date and amount of the donation. The rules have changed in that cash donations without a receipt are not deductible. That means if you plan to deduct a weekly donation to a religious entity, you must have a cancelled check, or a bank or credit card statement to be able to claim it as a tax deduction. Also remember that if you receive a benefit in exchange for your donation (tickets to a ball game, free admission to a museum or other goods), you can only deduct that amount that exceeds the fair market value of the benefit received.
If you are donating non-cash property to a charity (clothing, land or a vehicle), you can only deduct the fair market value of the items. Clothing can be determined by what a reasonable resale value would be, say if you chose to sell it on Facebook Marketplace or Craigslist. Larger donations like real estate or an automobile should have an appraisal amount to verify its value.
Are you considering a large donation to a charity or need some guidance on what you can write off come tax season? For a consultation, contact our office at 724-216-5180 or use our online form.