It feels good to give, but it can also have financial rewards come tax season. Here are some tips from the IRS to keep in mind:
▪ Qualified charities. You can only deduct gifts you give to qualified charities. Use the IRS Select Check tool to see if the group you give to is qualified. Remember that you can deduct donations you give to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.
▪ Monetary donations. Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.
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▪ Household goods. Household items include furniture, furnishings, electronics, appliances and linens. If you donate clothing and household items to charity, they generally must be in at least good used condition to claim a tax deduction. If you claim a deduction of over $500 for an item, it doesn’t have to meet this standard if you include a qualified appraisal of the item with your tax return.
▪ Records required. You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts.
▪ Year-end gifts. You can deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year, it will count for 2016. This is true even if you don’t pay the credit card bill until 2017. Also, a check will count for 2016 as long as you mail it in 2016.
▪ Special rules. Special rules apply if you give a car, boat or airplane to charity. For more information, visit IRS.gov.