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More on Deducting Charitable Contributions

December 15, 2016

If you give money or goods to a charity by Dec. 31, 2016, you may be able to claim a deduction on your 2016 federal income tax return and reduce their taxes. What qualifies and what doesn’t? Only donations to eligible organizations are tax-deductible. You can check a charity by going to the IRS’ Select Check- a searchable online tool that lists most eligible charitable organizations. You don’t need the charity’s EIN number, but if you want to do a search, put the name of the charity in quotes to ensure the best result. Churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations even if they are not listed in this database.

Only taxpayers who itemize using Form 1040 Schedule Acan claim deductions for charitable contributions. Charitable deductions are not available if you choose the standard deduction or file Form 1040A or 1040EZ.

Monetary Donations
A bank record or a written statement from the charity is needed to prove the amount of any donation of money. Bank records include canceled checks, and bank, credit union and credit card statements. Donations of money include by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

Donating Property
For donations of clothing and other household items the deduction amount is normally limited to the item’s fair market value. Household items include furniture, furnishings, electronics, appliances and linens. Clothing and household items must be in good or better condition to be tax-deductible. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more. It must include, among other things, a description of the items contributed. Special rules apply to cars, boats and other types of property donations.

For both types of donations, it’s important to note that if you get something in return for your donation – like a t-shirt, meals, tickets to an event or other goods and services – you should reduce your deduction by the amount of the item(s) received.

If you are an IRA owner, age 70½ or older, you can transfer up to $100,000 per year to an eligible charity tax-free. Funds must be transferred directly by the IRA trustee to the eligible charity. For details, see Publication 590-B.

Get more information at: Can I Deduct My Charitable Contributions?