This late in the year, you might think it’s too late to lower your 2016 tax bill. Maybe not!
Lower your taxes and warm your heart at the same time by making charitable contributions before year-end. Taxpayers may be able to deduct contributions to qualified charities. How do you know that a charity is qualified and your donation is deductible?
Answers to three common questions determine whether a donation is tax deductible:
Is the Charity Qualified?
Only donations to qualified charities with an IRS exemption designation are tax deductible. Qualified charities include humanitarian, religious, educational, scientific, and cruelty-prevention organizations. A list of qualified charities is posted in the IRS’ “Exempt Organizations Select Check” tool at http://bit.ly/1g0xhkc.
Who Can Take a Deduction?
Charitable donations are only deductible for taxpayers who itemize their deductions using IRS Schedule A. Donations must be acknowledged in writing by the charity. Donations of $250 or more must be supported by a letter from the charity stating the date and amount of the donation, reduced by the value of anything in received by the donor in return, such as a fundraising dinner.
What about Non-Cash Donations?
Donations don’t have to be financial. Items such as clothing, household goods, vehicles, stock, or real estate, can also be donated. In general, clothing and household items can only be deducted if they are in good usable condition. The deduction per items is based on the “thrift shop” value. Donated vehicles valued at more than $500 and donated property valued at over $5,000 are subject to more rules and limits.
Space limits the information presented here. Need more details? Consult a qualified tax professional or check out IRS Publication 526, Charitable Contributions, at http://bit.ly/1ep31yt.