When you made that donation to your favorite charity, taxes probably weren’t on your mind. But the benefit of a charitable contribution is two-fold: it positively impacts the charity you’re supporting and may benefit your bottom line at tax time. These guidelines for deducting charitable gifts can help.
Choose to itemize deductions
To benefit from your charitable gifts, you’ll have to itemize your deductions. Your tax situation determines if itemizing makes the most sense for you. Of course, making charitable contributions is good even if you can’t claim the deduction. But if your contributions are sizable, use them to your benefit.
Give to qualified charities
You must give your donation to a qualified charity. These include non-profits, religious institutions and government agencies, not gifts to individuals, politicians or a political organization.
Keep good records
The IRS won’t take your word when looking at deductions. You must keep proper records of donations — bank statements, credit card statements, cancelled checks or written letters from the charities or organizations. Payroll deductions that fund charitable gifts must be documented as well. Save paycheck stubs, W-2’s and any other supporting documentation from your employer.
Donations of $250 or less can be supported by receipts, cancelled check or statement. Donations of money or property of $250 or more must be supported by a letter from the charity that includes the organization’s name, the amount of the donation and the date of contribution.
Check condition of property gifts
Clothing and household items, such as furniture, appliances, electronics, furnishings and linens, must be in good condition if claimed for deductions. If you have any questions about your items, the charity will be able to assist you.
Non-cash donations of more than $500
Cars, boats and other expensive non-cash property are often given to qualified charities. If you’ve donated non-cash property of more than $500, you must file IRS Form 8283 for Noncash Charitable Contributions. Don’t forget, since your donation was more than $250, you’ll also need to submit a letter from the charity.
Get tax help
Accounting for a charitable donation may be confusing if you’re filing your own taxes. So you may decide to enlist the help of a professional. But whether you prepare your own taxes or hire a tax pro, let LGFCU help with complimentary or discounted tax prep in-person at a branch nearest you. Or, take advantage of the TurboTax discount available to members, if you prepare your own taxes online.
The advice provided is for informational purposes only. Contact a tax advisor for additional guidance.