6 Must Do’s When You Donate to Charity

Posted on 13. Nov, 2017 by in Bookkeeping Articles, Small Business Tips, Tax Updates

6 Must Do's When You Donate to CharityDonations are a great way to give to a deserving charity, and they also give back in the form of a tax deduction. Unfortunately, charitable donations are under scrutiny by the IRS, and many donations without adequate documentation are being rejected. Here are six things you need to do to ensure your charitable donation will be tax-deductible.

  1. Make sure your charity is eligible. Only donations to qualified charitable organizations registered with the IRS are tax-deductible. You can confirm an organization qualifies by calling the IRS at (877) 829-5500 or visiting the IRS website.
  2. Itemize. You must itemize your deductions using Schedule A in order to take a deduction for a donation. If you’re going to itemize your return to take advantage of charitable deductions, it also makes sense to look for other itemized deductions. These include state and local taxes, real estate taxes, home mortgage interest and eligible medical expenses over a certain threshold.
  3. Get receipts. Get receipts for your deductible donations. Receipts are not filed with your tax return but must be kept with your tax records. You must get the receipt at the time of the donation or the IRS may not allow the deduction.
  4. Pay attention to the calendar. Donations are deductible in the year they are made. To be deductible in 2017, donations must be made by Dec. 31, although there is an exception. Donations made by credit card are deductible even if you don’t pay off the charge until the following year, as long as the donation is reported on your credit card statement by Dec. 31. Similarly, donation checks written before Dec. 31 are deductible in the year written, even if the check is not cashed until the following year.
  5. Take extra steps for noncash donations. You can make a donation of clothing or items around the home you no longer use. If you decide to make one of these noncash donations, it is up to you to determine the value of the donation. However, many charities provide a donation guide to help you determine the value. Your donated items must be in good or better condition and you should receive a receipt from the charitable organization for your donations. If your noncash donations are greater than $500, you must file a Form 8283 to provide additional information to the IRS. For noncash donations greater than $5,000, you must also get an independent appraisal to certify the worth of the items.
  6. Keep track of mileage. If you drive for charitable purposes, this mileage can be deductible as well. For example, miles driven to deliver meals to the elderly, to be a volunteer coach or to transport others to and from a charitable event, can be deducted at 14 cents per mile. A contemporaneous log of the mileage must be maintained to substantiate your charitable driving.

Remember, charitable giving can be a valuable tax deduction — but only if you take the right steps.  Have questions on this article or need assistance with your bookkeeping?  Contact us today!  We’re here to help.

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