9 Rules for Tax-Smart Charitable Giving

You have to itemize deductions. Sorry, but if you take the standard deduction, you can’t write off your gifts to charity on top of that.

You need to give to a legit charity. To check if a nonprofit is a qualified charity in the eyes of the Internal Revenue Service, use the IRS’s Select Check tool. You can also deduct donations to your church, synagogue, mosque, or temple.

You can donate right down to the wire. For a gift to qualify for a deduction, you simply need to get your check in the mail by December 31. Need more time? You can put your gift on a credit card before year-end and then pay the bill in January. (Keep in mind, though, that when you pay by credit card, processing fees may reduce the value of your gift.)

You should save your backup. Make sure you have a receipt for your gift. A cancelled check or credit card statement may be enough. But if you make a donation worth $250 or more, you must get a written acknowledgment from the charity.

Your time can be worth money. As a volunteer, you can’t deduct the value of your time. But you can deduct 14¢ for every mile you drive as part of your volunteer work, so keep track.

You shouldn’t take credit for giving away actual junk. If you donate clothes or household items, you’ll be able to deduct the fair market value—as long as the items are in good condition or better. Keep any paperwork you have for valuable items, and take photos of your donations for your records. It’s up to you, not the charity, to assign a value to your stuff. To do that, you can use thrift store guides published by the Salvation Army, Goodwill, and others, or the ItsDeductible app.

You can’t inflate the value of your old car. When you donate your old wheels to charity, your deduction is generally limited to what the nonprofit brings in by selling your car, not the Kelley Blue Book value. Plus, when you donate a car or other property worth more than $500, you’ll need to file IRS Form 8283.

You can get two tax breaks if you donate winning investments. Another way to save on taxes is to give highly appreciated stocks, bonds, or mutual funds directly to a charity. You won’t owe any taxes on your capital gains. And you can deduct the full market value of the investment as a charitable gift.

You can contribute a big sum now and give it away later. If you open what’s called a donor-advised fund, you can deduct the entire gift on your 2014 tax return and parcel out the money to good causes later. With as little as $5,000, you can open a donor-advised fund at firms such as Fidelity or Schwab.

 

 @ellenstark, Dec. 1, 2014

From:http://time.com/money/3612658/charitable-giving-tax-deduction/

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