Some Helpful Tips for People Thinking of Giving Year-End Tax-Deductible Gifts to Charities
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Some Helpful Tips for People Thinking of Giving Year-End Tax-Deductible Gifts to Charities

Giving a gift of money or items to charity is a great thing, but there are things to keep in mind if you are hoping to claim a tax deduction for them

December 9, 2019

Gifts to charity are one of the best tax-saving opportunities available. Not only does the charity benefit, but the taxpayer receives a tax deduction. The ways you can contribute, along with the limits and benefits of doing so, are varied and confusing. As with most tax benefits, changes are made from time to time to those limits and other regulations, including some that came into effect for 2019.

Not all donations are tax deductible

You can donate anything you want to anyone you want. But in order to get a tax deduction, the recipient must be duly qualified under section 501(c)(3) of the Internal Revenue Code by the Internal Revenue Service (IRS). That means family, friends, and any other person or group who doesn't have the proper tax-exempt status can't get you a tax deduction.

You may not be able to deduct a qualifying donation

In order to personally reap any potential benefits from a qualifying donation, you need to file IRS Form 1040 and itemize deductions on Schedule A. Taxpayers will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction.

But tax law changes in 2019, which increased the standard deduction, mean that most taxpayers won't benefit from itemizing deductions. That means that if you don't itemize deductions, you can't get any tax benefit from your donation. But that doesn't mean the charity won't benefit from your help.

Tax Deduction Limits to your Donations

There are some limits to your tax deductions when it comes to making donations. For example, there is a limit for the total amount of all charitable contributions made during a single tax year, which is typically between 30% and 60% of your adjusted gross income. The amount will depend upon the type of organizations that receive your donations.

Rules for Charitable Contributions of Clothing and Household Items

Household items include furniture, furnishings, electronics, appliances and linens. Clothing and household items donated to charity generally must be in good used condition or better to be tax-deductible. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Guidelines for Monetary Donations

A taxpayer must have a bank record or a written statement from the charity in order to deduct any donation of money, regardless of amount. The record must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, and bank, credit union 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. 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.

Written Acknowledgment over $250

Donors must get a written acknowledgment from the charity for all gifts worth $250 or more. It must include, among other things, a description of the items contributed. This requirement still applies if the taxpayer has bank records showing the donations. However, one statement containing all the required information may meet both requirements.

Make Sure it's deductible

Not every nonprofit organization has this status, so make sure you check first to make sure the organization qualifies you for a tax deduction. Additionally, churches, synagogues, temples, mosques and government agencies may be eligible to receive deductible donations even if they are not in the IRS database. The donation would typically have to be for a specific tax-exempt purpose.

Donations are eligible for the year made

Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2019 count for tax year 2019, even if the credit card bill isn't paid until 2020. Also, checks count for 2019 as long as they are mailed in 2019.

Special Rules

The deduction for a car, boat, or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C or a similar statement must be provided to the donor by the organization and attached to the donor's tax return. If the amount of a taxpayer's deduction for all non-cash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

Consider Helping Us out

The North Carolina Consumers Council is a charitable organization. If you're looking to do some good, as well as to get a tax deduction, consider donating. Public donations help us produce the content you read, as well as helps us get into the community and work directly with consumers on a variety of topics, including general consumer education and scam prevention.