Tis’ the season for Giving. With the Holidays approaching many people are graciously wrapping up gifts bought for those less fortunate. Even during times of economic uncertainty, millions of Americans are still generously giving both time and money to nonprofit and charitable organizations. Thanks to IRS deductions provided by Uncle Sam charitable contributions can be win-win for both the giver and the recipient.
According to Michelle Musacchio, CPA and owner of Fit Money CPA, “When you give to a qualified charity such as the Salvation Army, Humane Society, Goodwill, or your church, depending upon your taxing situation, you may be entitled to a charitable deduction on Schedule A of your individual income tax return.”
Here are a few tips to help you qualify for the deduction…
Save the Receipt. “All qualified charities are required to give you a receipt for your donation, no matter what the dollar amount,” Musacchio says. “You may not take a deduction for cash contributions unless you have this.” If they fail to provide you one, keep other documentation in support of your giving. For example, receipts from the stores you shopped at along with information regarding the family you are supporting. In general, you may not deduct gifts given to your own family members or friends, regardless of their need.
Household and Clothing items. If you are not buying things brand new, but are rather donating pre-used items, the story is nearly the same. “You need a receipt for these items as well,” Musacchio mentions. “But also, the items should be in good condition to be donated. Clothes should not be wholly and household items must be usable, not junk.”
What about my time? While it is admirable to donate time to any organization, “You are unable to take a charitable deduction for your time or services rendered,” Musacchio notes. “But you may take a charitable deduction for mileage driven for charitable purposes and out of pocket expenses.” Once again, you must show record of these expenses through receipts and mileage logs.
Are you feeling a theme? In the spirit of giving, it is nice to know Uncle Sam gives us an incentive to give to those less fortunate… as long as we can prove it!
This is a weekly featured post on Own The Dollar from Sara Peak, a Certified Financial Planner and a veteran of the finance industry. In addition to her monthly “Money Matters” column in Kentucky Living magazine, she also writes about money and personal finance topics on her blog.
Be sure to look for more great featured articles every week from Sara. If you have a question or topic that you would like for her to discuss, please contact us.
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You’ll get a tax deduction of at least $500 when you donate your car to charity. Cars4Charities will handle the entire car donation process for you and pick your car up at no charge. You can even donate a car that doesn’t run.
How about Gov’t grants? I think it’s very helpful. I have read a book about it and found it helpful in starting a business. It’s called:
How to start or grow business using government grant money – Directory of grant funding programs
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