As 2014 draws to a close, many of our clients are thinking about making annual gifts to charities. The IRS has just posted a handy article with six tips to keep in mind to make sure that you can claim an income tax deduction for the gift. Here’s a summary:
1. Qualified charities. Make sure that you are making a donation to a qualified charity. The IRS offers a tool to make sure that your intended recipient is qualified. Donations to churches, synagogues, temples, mosques, and government agencies are also deductible, even if they’re not listed.
2. Monetary donations. If you want to give a charity money, in cash, or by check, electronic funds transfer, or credit card, you must have a bank record (like a cancelled check) or a written statement from the charity to deduct the gift.
3. Household goods. If you donate household items to charity, they must be in at least good used condition to claim a tax deduction. If you claim a deduction of more than $500 for an item, it doesn’t have to meet that standard if you include a qualified appraisal of the item on your tax return.
4. Record required. You must get a written acknowledgement from a charity for each deductible donation of $250 or more.
5. Year-end gifts. You can deduct contributions in the year that you make them. If you charge your gift to a credit card before the end of the year, it counts for 2014, even if you pay the bill in 2015. The same rule applies to checks, as long as you mail it in 2014. (But we advise our clients to have the checked cashed in 2014, just to be extra safe.)
6. Special rules for donations of car, boats, or airplanes to charities. For more info on the special rules for these contributions, go to IRS.gov.