In the last few weeks of the year, you may be considering final charitable giving contributions. Such year-end giving make sense, because there are many more giving options highlighted during the holidays to which one can make a qualifying charitable contributions and because it is the last chance during which you can give and have the gift count as a deduction on your 2014 income tax return.
If you are planning to make a year-end charitable contribution, there are several tax law changes you should keep in mind to be sure you are able to take full advantage of your gift from a tax standpoint.
Charitable donations are deductible in the year in which they are made. Therefore, in order for a charitable gift to be deductible from a taxpayer’s 2014 income tax, the donation must be made by December 31, 2014.
The date of a charitable gift is when the funds leave your possession, which is either the date the funds are mailed or the date the funds are charged to your credit card or removed from your bank account.
Charitable Contributions of Non-Monetary Household Items, Including Clothing
When you make a donation of non-monetary household items or clothing, including furniture, electronics, appliances, and other similar items, the items must be in good condition to qualify as a deduction for income tax purposes. If the items are not in working conditions or are damaged, you cannot claim a charitable deduction.
However, if the item is worth $500 or more, the item does not have to be in good or working condition if you obtain an appraisal that supports the value of the item. In addition, if the items are worth more than $250, the taxpayer must obtain a written receipt from the charity that describes the items donated.
Charitable Contributions of Money
For any charitable donation of money, the taxpayer must obtain a bank record or other written statement with the amount contributed, the name of the charity, and the date of the contribution. This requirement applies for any monetary donation, regardless of how small.
Charitable monetary contributions include those made by cash, check, electronic fund transfers, credit card charges, and payroll deductions. Documents that suffice as proof of a donation of money include canceled checks, bank statements, and credit card statements.
In addition, for monetary contributions of $250 or more, the taxpayer must obtain a written acknowledgement from the charity.
Only certain entities are eligible for a taxpayer to deduct any contribution from their income tax. The IRS maintains on their web site the Exempt Organizations Select Check, which is a list of entities that qualify for charitable giving. In addition, any churches or government entities are considered qualified charities even if they do not appear on the IRS’ web site of exempt organizations.
Only taxpayers who itemize their deductions can deduct a charitable contribution from their income tax. A deduction for charitable contributions is not permitted for taxpayers who use the standard deduction.
Taxpayers should always review their standard deduction and all their possible itemized deduction as calculated using Form 1040 Schedule A to determine whether the standard or itemized deduction provide them the most favorable tax position.
How can I get more help with charitable giving as it relates to my income tax return?
You can speak with a tax attorney to get help with charitable contributions for your individual situation. A tax attorney will be able to help make sure any contributions you give qualify as a deduction on your income tax return.
You can speak with a tax attorney by call the phone number at the top of this web site or by completing the form below. The first consultation with a tax attorney is free of charge, so you have every reason to get help today before time runs out.
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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.