Tax tips for your Giving Tuesday donations
With all of the hoopla around Black Friday and Cyber Monday, the true spirit of the holiday season can get lost. Sure, getting a good deal on a big screen TV feels like a win, but for many, giving to others is what makes this time of year so special.
To combat the obsession with shopping, the Tuesday after Thanksgiving, this year Nov. 28, has been dubbed Giving Tuesday, a global day that puts a focus on donating your time and money to organizations and charities in your community.
While most participants don’t expect to receive anything in return, there are some perks to donating money, especially at this time of year. Charitable donations are tax deductible in the year they are made, so many people will try to squeeze in contributions by Dec. 31.
Whether you give today or in the upcoming weeks, here are some reminders from the Internal Revenue Service to make sure you’re maximizing your contributions.
Make sure your charity is legitimate
There are a lot of amazing charities out there, but not all of them are in good standing. Donations are only tax-deductible if they are made to eligible organizations, so check your charities’ status by using the IRS Select Check tool. For the record, churches, synagogues, temples, mosques and government agencies are eligible to receive tax-deductible donations, even if they aren’t listed in the database.
Monetary donations
It’s important to keep a detailed record of transactions when it comes to monetary donations. Be sure to obtain written documentation from the charity displaying the name of the organization, date and amount given. Do this regardless of the amount. If you can’t get a letter, bank records will also do the trick. This includes items like canceled checks, bank or credit union statements and credit card statements.
In most cases, taxpayers will donate money via cash, credit card, electronic funds transfers or payroll deduction. If you choose the latter, be sure to retain a pay stub, W-2 form or any documentation from your employer showing your contributions.
In general, you should always obtain documentation from the charity for every $250 you donate.
Clothing and household items
Donated items must be in good condition. This standard doesn’t have to be met if the taxpayer claims a deduction over $500 and provides a qualified appraisal of the item with their return.
For donations of $250 or more, taxpayers must get a written acknowledgement that includes a description of the items donated, date, and charity name.
Document any gifts in return
Sometimes charities offer gifts to people who make donations. This could be anything from free merchandise, to meals or tickets to an event. If this is the case, your written acknowledgement must provide a description and estimated value of any goods or services given to you in exchange for the donation. Depending on how much the gift is worth, your deduction may be reduced.
Brittany Jones-Cooper is a reporter at Yahoo Finance.
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