Giving to charity is a good thing, especially during times of need, such as a disaster response. However, do you know how giving to charity affects you at tax time? There’s a few things you should consider:
Itemizing
You need to itemize your deductions via a Schedule A in order to deduct your charitable contributions.
Date of the Donation
You have to have made the donation during the tax year in order to deduct it on your tax return. The contribution needs to have been completed by December 31st, and you should have a receipt or bank record if you donated cash less than $250. Donations over $250 in cash need to have written documentation from the charity as well as a receipt.
If you donate stock or other assets that are not cash, you are subject to the fair market value of the property when you deduct it. Additionally, household goods and clothing items have to be in good condition to be deductible.
Qualifying Nonprofit
The charity to which you donate must be a qualified organization, as gifts given to individuals, candidates and political organizations are not deductible.
Benefit Deduction
If the organization returns your appreciation of a donation with a gift such as merchandise or event tickets, you are only eligible to deduct the amount of the donation you made that exceeds the fair market value of the gift you received in return.
