It’s always a good feeling to brighten someone’s day by making a contribution to a charitable organization, knowing that your donation will go to someone in need. It’s even better knowing that this contribution may qualify as an IRS tax write-off when the time comes to file your return. Bert Seither, The Startup Expert™, explains how this charitable contribution deduction works.
To qualify for a charitable contribution deduction, you must properly document and itemize every item you donate in order to make the IRS aware of this information. It is even more important to document any cash donations you make. For contributions that are exactly or exceed $250, you should receive some type of written documentation about the contribution from the organization taking it. You should also have a description of any other property donated if you are donating money and other items together.
While it’s nice to make donations to all types of charitable organizations, some items must be given to specifically designated “qualified charities” to claim this write-off. Because of this, taxpayers may need to consider only giving to some of the more reputable charities out there that are well-established and have been around for a long time. Donated items like plastic toys, stuffed animals, clothing, and electronics should be in good condition or better in order to take the write-off, according to IRS verbiage. The IRS provides specific information on which charities are considered “qualified” on its website. However, if a charity is formally arranged like a 501(c)3 organization, there’s a good chance you can deduct contributions to it.
Along with writing off these smaller items that you donate, there are tax advantages for giving used vehicles to various organizations. Bert Seither, The Startup Expert™, points out that there are two basic methods to determine the deduction amount for donating secondhand vehicles. One method accounts for how much a charity sells a vehicle for in the future after it was donated. The other option takes into consideration the “fair market value” of the car. You can typically find this value through car listing services like Kelly Blue Book. Vehicle donors should get a written acknowledgement from a charity to include with their tax returns when they file them. Plus, each organization has its own rules on the condition of a car before accepting it. Check with your charity of choice for this information.
To learn about which charitable organizations are supported by Bert Seither, The Startup Expert™, check out www.bertseithercharities.com.