IRS Tips for Year-End Gifts to Charity

Here are six IRS tips to help ensure your year-end donations are deductible.

The holiday season is always the time of year when people give the most to charity. If you itemize your deductions, you can deduct your charitable contributions, provided you follow IRS rules. The IRS has released six helpful tax tips that will help deduct charitable contributions

Tip #1: You Must Give to Qualified Charities

You can only deduct contributions that you give to two types of charities: (1) “qualified charities,” and (2) religious organizations. A qualified charity is one that has applied for and obtained recognition from the IRS as a Section 501(c)(3) charity. These charities are listed in an IRS database that you can search using the agency's Select Check tool. Religious organizations such as churches, synagogues, temples, and mosques don’t have to apply to the IRS to have their charitable status recognized, although many do so anyway. Gifts to religious organizations are deductible even if they are not listed in the IRS’s Select Check database.

Tip #2: You Need Records to Deduct Monetary Donations

For IRS purposes “money” includes gifts made by cash, check, electronic funds transfer, credit card, or deductions from your paycheck. No matter how much or how little money you give, you must always have a bank record or written statement from the charity to deduct the gift. The statement must show the charity’s name and the date and amount of the contribution. Bank records include canceled checks and bank or credit card statements. If you give cash, you won't have a bank record, so you'll need obtain a written record of the donation from the charity.

Tip #3: You Need an Acknowledgement for Gifts of $250 or More

If you’re nice enough to make a donation of $250 or more in money or property, you must obtain an acknowledgment from the charity. The written acknowledgement must contain:

  • the charity’s name
  • the amount of the contribution
  • the date of the contribution, and
  • a statement that no goods or services were provided by the charity in return for your contribution, if that was the case.

Tip #4: Donating Household Goods

Charities usually prefer to receive cash, but many people like to donate household goods like clothing, furniture, and electronic equipment. You can deduct the fair market value of such items, provided they are in at least good used condition. You can use the Salvation Army Donation Value Guide to find suggested fair market values for such used items.

If you donate really expensive items—that is, items you claim are worth $5,000 or more—you must obtain an appraisal of the value and attach a summary to your tax return. No appraisal is required if you claim the items are worth $500 to $5,000, but you must keep written records for each donated item (1) describing the property, (2) showing when and how it was acquired, (3) listing its cost and fair market value when contributed, and (4) explaining the method used in determining such fair market value.

Tip #5: Time Limit for Year-End Gifts

Obviously, you must make a charitable contribution no later than December 31, 2014 of the year in which you want to claim the deduction. If you like to wait to the very last minute to make your contributions, be aware that so long as you charge a gift to your credit card before the last day of the year, it will be deductible in that year. This is so even if you don’t pay the credit card bill until the following year. Also, a postal mailed check donation will be deductible in the year it was mailed as long as it is postmarked on or before December 31 of that year.

Tip #6: Special Rules for Donating Vehicles, Boats, and Airplanes

There are special rules you and the charity need to follow if you donate a car, boat, or airplane to charity. Whenever a donated vehicle is sold for more than $500, the charity must provide the donor and the IRS with a written acknowledgment within 30 days after the sale. The IRS has created a special form for this purpose, IRS Form 1098-C, Contributions of Motor Vehicles, Boats and Airplanes.

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