(12/23/2011) Erate Exclusive - Unless you get a receipt, the money you
drop in a bell-ringer's pot outside a retail store isn't tax deductible.
The Internal Revenue Service says when you make
contributions to charity you must follow tax law provisions that dictate how
you can take a tax deduction on your federal tax return.
Created in 2006, the option is available for distributions from IRAs,
even if you don't itemize your deductions. Distributions from
employer-sponsored retirement plans, including SIMPLE (Savings Incentive
Match Plan for Employees) IRAs and simplified employee pension (SEP) plans,
are not eligible.
To qualify, the funds must be contributed directly by the IRA trustee to
the eligible charity. Transferred amounts are not taxable, but you cannot
take a deduction for this type of contribution.
Not all charities are eligible for IRA distribution contributions. For
example, donor-advised funds and supporting organizations are not eligible
recipients.
IRS Publication 590, Individual Retirement Arrangements (IRAs) offers
more information and a tax professional can help.
Rules for donating clothing and household Items
To be deductible, clothing and household items donated to charity must be
in good used condition or better. Household items include furniture,
furnishings, electronics, appliances and linens.
A clothing or household item for which you claim a deduction of over $500
does not have to meet this standard if you include a qualified appraisal of
the item with your tax return.
You should obtain a receipt or other documentation stating the value of
the donation for all donations listed as a deduction on your return for your
records and in case you are audited.
Guidelines for monetary donations
If you want to deduct a charitable donation of cash you must have a bank
record or written communication from the charity showing the name of the
charity and the date and amount of the contribution.
Bank records include canceled checks, bank or credit union statements,
and credit card statements. Bank or credit union statements should show the
name of the charity, the date, and the amount paid. Credit card statements
should show the name of the charity, the date, and the transaction posting
date.
Donations of money can include donations made in cash or by check,
electronic funds transfer, credit card and payroll deduction. For payroll
deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement
or other document furnished by the employer showing the total amount
withheld for charity, along with the pledge card showing the name of the
charity.
You must also obtain an acknowledgment from a charity for each deductible
donation (either money or property) of $250 or more. One statement
containing all of the required information may meet both the charity's
acknowledgement requirement and bank record or written communication
requirement.
Contribution reminders
• Charitable contributions are deductible only in the year they are
made. Donations charged to a credit card before the end of 2011 are
deductible for 2011, even if the credit card bill isn't paid until 2012.
Likewise, checks for contributions mailed in 2011 are deductible for
2011.
• Only donations to qualified organizations are tax-deductible.
Search IRS Publication 78
at IRS.gov under "Search for Charities" to find qualified organizations.
Churches, synagogues, temples, mosques and government agencies are also
eligible to receive deductible donations, even if they are not listed in
Publication 78, provided you follow IRS's documentation requirements.
• You can claim deductions for charitable contributions only if you
itemize your deduction on Form 1040 Schedule A. Also, you will only have a
tax savings if the total itemized deductions (mortgage interest, charitable
contributions, state and local taxes, etc.) exceed the standard deduction.
• If you donate a motor vehicle, boat or airplane, the deduction is
typically limited to the gross proceeds from its sale if the claimed value
is more than $500. You must obtain IRS Form 1098-C, or a similar statement,
from the organization and attach it to your return.
• If the amount of your deduction for all non-cash contributions is
more than $500, you must complete IRS Form 8283 and submit it with your tax return.
