Year End Tax Tips For Holiday Charitable Giving

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MOUNTAINSIDE–The spirit of giving seems to grow during the holiday season, and many donations are made to charitable causes at this special time of year. The IRS reminds taxpayers to keep some important points in mind when making donations with the expectation of deducting them on a federal tax return.

Taxpayers can deduct donations only if they make them to a qualified tax-exempt organization.

“Taxpayers can search for many charitable organizations online at www.irs.gov with Publication 78,” said IRS spokesperson Gregg Semanick. “Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals. Generally, organizations will be able to tell you whether they are tax exempt under the Internal Revenue Code and eligible to accept tax-deductible donations.”

Semanick added that it is necessary to file Form 1040 and itemize deductions on Schedule A to receive a charitable contribution deduction. Be sure to keep good records, too.

To deduct any charitable donation of money, a taxpayer must have a bank record, credit card statement or a written communication from the charity showing the name of the charity and the date and amount of the contribution. A bank record includes canceled checks, bank or credit union statements. Bank or credit union statements should show the name of the charity and the date and amount donated. Credit card statements should show the name of the charity, the transaction posting date and the amount donated.

Contributions are deductible in the year made. Donations charged to a credit card before the end of 2010 count for 2010. This is true even if the credit card bill isn’t paid until 2011. Also, checks count for 2010 as long as they are mailed in 2010 and clear, shortly thereafter.

For all donations of property, including clothing and household items, obtain from the charity, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. To deduct charitable contributions of items valued at $250 or more you must have a written acknowledgment from the qualified organization. To deduct charitable contributions of items valued at $500 or more you must also complete a Form 8283, Noncash Charitable Contributions, and attach the form to your tax return.

To be deductible, clothing and household items donated to charity must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to be in good used condition or better if the taxpayer includes a qualified appraisal of the item with the return.

More information about charitable donations can be found in IRS Publication 526, available online at www.irs.gov, or requested by calling, toll-free, 1-800-TAX-FORM.


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