Feeling charitable? Review the tax rules.
During the holidays, you're probably going to give a little extra to your favorite charity. If you itemize deductions, your kindness may bring you an extra reward in the form of a tax deduction.
Here's a short list of tax reminders for this year's charitable deductions:
- Make sure the organization qualifies for a deduction. Remember that contributions to civic groups, unions, chambers of commerce, and political candidates usually don't qualify. If in doubt, check IRS Publication 78 which lists all qualified organizations. It's available online or at many libraries.
- The law has strict recordkeeping requirements for deducting charitable contributions. For cash contributions under $250, you must have a bank record such as a cancelled check, credit card record, or receipt from the charity. For donations of $250 or more, a receipt from the charity must be obtained before filing your return.
- If you donate property, make sure you claim a realistic value. Used clothing and household items donated to charity must be "in good condition or better." A written receipt from the charity is necessary for a deduction. You'll need an independent appraisal for any donated item valued above $5,000.
- Don't forget to deduct your mileage and other out-of-pocket expenses for charitable work. Track your mileage and claim 14 cents a mile in 2011.
If you have any questions concerning your charitable donations, contact us.
Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.
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