Maximize Your Tax Benefits

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You answer calls to support your Alma mater, the local animal shelter and the American Red Cross with gifts of money and volunteer time. And after cleaning out the closets, dressers, kitchen cabinets and garage, you take a trunk load of donations to the thrift store.

You know your gifts of cash and household items may be tax deductible, but what do you need to do to verify that and maximize your deduction?

To determine if you've donated to eligible organizations, search the IRS' database of Exempt Organization Select Check at www.irs.gov. Most religious organizations and government agencies are eligible, even if they're not listed in the database.

Keeping detailed records is important for accurate valuation of your gifts (and in turn your tax deduction) and in the unlikely event of an audit. Records should include organization name, donation date and amount.

For monetary gifts, keep the written acknowledgment from the organization with the donation date and amount. A canceled check or card statement with the transaction date also suffices for gifts under $250.

If you receive merchandise, benefits or privileges in exchange for a gift, you must subtract the value of those from the original gift amount. If your payment is more than $75, the organization must give you a written statement with a description and estimated value of the merchandise, goods or services.

For non-cash donations, document the charity name, date and location of the items, along with a reasonably detailed description of the items. If you receive a receipt from the charity, keep it with your records.

The IRS requires additional documentation for vehicle donations. You must receive a written acknowledgment or Form 1098-C from the charity for the vehicle.

Non-cash donations, such as clothing, kitchen gadgets and furniture, must be in good condition or better. The tax-deductible amount of those items is the fair market value (FMV), the price if they were exchanged between willing buyers and sellers. Special rules apply to donations of cars, property subject to debt, investments that have appreciated in value and inventory from your business.

You can deduct charitable gifts you made between Jan. 1 and Dec. 31 only if you itemize deductions on Form 1040 Schedule A. In order to itemize, all of your itemized deductions must exceed the standard deduction amount based on your adjusted gross income and filing status.

Additionally, you must file Form 8283 if your non-cash contributions total more than $500, and include a qualified appraisal of property worth more than $5,000.

tax, financial