How to get the Most Benefit Out of Your Donation
Many people want to help worthy causes. You may decide to lend your support to one or more of your favorite nonprofit organizations. Making your gifts before year-end can give you the opportunity to claim a tax deduction for your charitable contributions on your tax return.
Give to a qualified organization
To gain a tax deduction for your contribution, it must be made to a qualified organization. Among others, qualified organizations include nonprofit groups that are religious, charitable, educational or scientific in purpose. The IRS has an Exempt Organizations Select Check tool on its website (irs.gov) that can help you search for qualified organizations. Note that you can’t deduct contributions to specific individuals or to political organizations and candidates.
Itemize your deductions. Your charitable contributions are deductible only if you itemize your deductions (not if you claim the standard deduction). Once income exceeds a specified level, itemized deductions are reduced.
Deduct the fair market value of donated property
If you donate stock or other noncash property, it usually will be valued at its fair market value for tax-deduction purposes. Donations of used clothing and household items are usually valued for less than the price you paid for them.
Pay attention if you receive a benefit
If you receive merchandise, tickets to a sporting event or other goods and services because of your contribution, you only can deduct the amount of your contribution that exceeds the value of the benefit you received.
Get a receipt
To deduct a contribution of any amount, you must maintain a bank or payroll deduction record or a written communication from the organization showing the organization’s name and both the date and amount of the contribution. For a contribution of $250 or more, you will need a contemporaneous written acknowledgment from the organization containing specific information.
Look for additional details on the IRS’s website and consult your tax advisor. To discuss how you might include charitable giving in your estate strategy, please give us a call today.