Income Tax Tips for Year-End Charitable Giving

We are down to the last two weeks of 2012.  For many, the end of the year not only means finishing up last-minute shopping for Christmas gifts and planning for the cooking of family feasts, but also the joy of giving to those who are less fortunate.  Not only do we give to help those out who are in need this time of year, but when you give, you also get the added benefit of being able to deduct the value of gifts on your 2012 tax return.

Charitable Giving Basics

To take advantage of charitable giving from an income tax standpoint, you need to remember two things for starters:

  1. You must itemize deductions on your federal income tax return in order to deduct the amount of any charitable giving.  This means the value of your charitable giving plus any other itemized deductions must be more than your standard deduction.
  2. Your charitable giving must be made to a 501(c)(3) qualified organization.  Charitable giving for income tax purposes cannot be made to individuals or families.

Proper Support

In addition, you need to maintain the proper evidence or support of the value of any charitable giving.  You will only need this support if your income tax return is audited by the Internal Revenue Service (IRS), but the time when you are giving the charitable gift is the ideal time to properly document and save that support.  If you attempt to create or obtain support of the value of your charitable gift when you are audited, the IRS will not all you to claim the charitable gift on your income tax return.

For charitable giving of cash, that support should include a copy of the cancelled check or your credit card statement, as well as a letter from the qualified organization acknowledging receipt of the gift, the date the gift was received, and the amount of the gift.

For charitable giving of non-cash items, if the non-cash items are each worth less than $250, you can generally use a fair market value of the item obtained from a reputable web site dedicated to valuing such items.  Some qualified organizations that commonly receive household items or clothing as a part of charitable gifts (such as The Salvation Army and Goodwill) may even have sections of their web site to help you estimate the value of any charitable gifts.

If you are giving a non-cash item worth more than $250, you will need to take additional steps to obtain support of the value.  These steps can include documenting a history of how you obtained the item, having a photograph of the item, and receiving a formal appraisal of the value of the item.

Tax Attorney Assistance

If you have questions about your federal income tax return including questions related to charitable giving of cash or non-cash items, you can get answers to your questions by calling the telephone number located at the top of this web site.  A tax attorney who is an expert in charitable giving can answer your questions and be sure you take the proper steps for your charitable giving from an income tax standpoint.

Therefore, you have every reason to make the call today to get the help you need with your charitable giving questions.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.