Did You Know You Need Receipts For Tax Donations?

The beginning of a new year means getting your files ready for a new tax season. It’s time to get your previous year‘s files ready for the tax accountant, or for yourself if you do your own taxes. There are many ways to maximize your tax refund that should be discussed with your accountant, but one path everyone should use is to donate goods and money to non-profit organizations and funds. This is a winning approach for all because through giving to worthwhile causes, you will enjoy a tax break. Not all donations are tax deductible, however, and you must follow a few rules to make the deductions legitimate with the Internal Revenue Service (IRS). Here are some helpful guidelines for making tax deductible charitable donations.

1. Observe the Deadline: All individuals and businesses must have made their charitable contributions by the deadline of December 31st on the year for which they are claiming the deduction.

2. Obtain Receipts: Whether the donation is given to a church on a weekly basis or to canvassers for a local charity, the person claiming the deduction must be able to show a receipt for the amount given. Receipts can be obtained from the charitable organization, or be documented by a cancelled check, bank statement, deduction statement on a paycheck, or by a dated letter from the charity stating the amount given.

3. Use A Qualified Appraiser: Some donors give cars, houses, boats, household goods, or clothing to charities. You will need a receipt from the charity with the stated assessed value, or you can use a professional appraiser’s receipt for tax purposes. All tangible goods donated must be in “good used condition or better” per the IRS guidelines.

4. Donate to Known Charities: This may sound like an obvious statement, but many people assume their donations are going to non-profit organizations when they aren’t. Be sure to check the tax status of the organization online to see if the charity is actually non-profit before you make the donation, or contact the IRS online for a list of acceptable charities at IRS.gov.

5. Value Based on Resale: If you donate goods or clothing to a charitable organization, you will only receive the tax donation benefit for the amount at which the item sold. For example, you may donate your $3,000 satin Armani gown to a charity thrift store, but if the gown only sells for $50.00, then the sales price is your charitable deduction, not the purchase price.

6. Form 1098-C: If you are claiming a very large donation as a tax deduction, then you will be required to fill out and submit a Form 1098-C which is available online from the IRS. Be sure to check with your accountant or the IRS for the necessary documentation and guidelines prior to filling out this form.