By Jen Hildebrand
This time of year is about the joy of giving. Gifts can take many forms – usually they are a combination of your time, talent and treasure. As financial planners, now is also the time of year we remind our clients to claim a tax deduction for their gifts if those gifts are eligible. Contributions are deductible in the year made, meaning that if you charged a donation to a credit card in 2017, that donation counts for 2017, even if the credit card bill isn’t paid until 2018. Here are five more tips from the Internal Revenue Service:
- Itemize deductions. Individuals must itemize their deductions on Form 1040 Schedule A to claim deductions for charitable contributions. This deduction is not available to individuals who choose a standard deduction, including those who file a short form. You will have a tax savings only if the total of your itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction.
- Qualified charities. Gifts to charities can only be claimed if the group you give to is qualified. Use the IRS Select Check tool to make sure. Even if you do not see them on the Select Check list, all donations to churches, synagogues, temples, mosques, and government agencies are qualified.
- Bank records for monetary gifts. Any amounts of gifted money (cash, check, electronic funds transfer, credit card and payroll deduction) must include a bank record or written statement from the charity on your tax return. The record must include the date, the name of the charity, and the amount donated.
- Household goods. These include donations of clothing furniture, electronics, appliances and linens. These items must be in at least good used condition to claim a tax deduction. A household item with a tax deduction claim of more than $500 does not have to meet this standard if you include a qualified appraisal of the item with your tax return.
- Record donations. If possible, get a receipt for your charitable donation that includes the name of the charity, date of the contribution and a description of the item(s). Additional rules apply for a contribution of $250 or more. Deductions for a car, boat or airplane donated to charity is usually limited to the gross proceeds from its sale if the claimed value is more than $500.
Please visit irs.gov for more information.
If charitable giving is a part of your financial picture, and you would like to discuss how you can deduct your giving, or advanced strategies around giving, schedule a meeting by clicking below, contact Jen Hildebrand –jhildebrand@makinglifecount.com, or call (913) 345-1881.