Lower Your Taxes While Being a Good Person!

[Time to Read: 3.6 mins]

Steve Ganns, https://gannsblog.wordpress.com, says Lower Your Taxes While Being a Good Person!As the end of the year rolls around, it might be time for us to take one last look at those charities that keep sending us information throughout the year and actually make a donation or two.

I know deep down in our hearts, we all want to do whatever we can to help organizations that do good works for people, but sometimes being barraged with so much information, we just toss the appeals to the side. However, the IRS will give you a tax break for donations to charity, so let’s look at this one last time before the year ends.

In order for donations to qualify as tax deductions, they must be made to qualified charities. In other words, non-profit organizations. However wonderful you might feel about giving a homeless person that lives in your town a coat or money or a hot meal, that is not tax deductible. Not to say you shouldn’t still do it, but since that person is not a non-profit organization, you cannot deduct those gifts on your taxes.  Nor can you deduct clothing and other things donated to your sickly old aunt.  It’s a nice thing to do, but not recognized by the IRS as deductible.

When I talk about cash donations, I mean:

  • Cash
  • Check
  • Electronic fund transfer
  • Credit card

The documentation you must retain in order to deduct the contributions must be in the form of a cancelled check or credit card receipt, etc. If the donation is over $250, the organization is required to send you an acknowledgement, a letter stating exactly how much you donated.

Besides money, you can give tangible property, which includes:

  • Home furnishings
  • Electronics
  • Linens
  • Appliances
  • Furniture

The donated household items must generally be in good used condition in order to claim a tax deduction. If you claim a deduction greater than $500, you must have a receipt from the charitable organization stating what you gave, the date you gave it and a general description of each item.

Many organizations will simply note on the receipt that you gave, for instance, five boxes of clothing. In that case, it is up to you to itemize that list and place a value on it. This value is usually much less than the actual cost, even if you only wore or used the item once.

Back to contributions of money – – If you want to help your cash flow, you can actually charge your charitable gift to a credit card before the end of the year and it will count for 2014, even though you don’t pay the bill until 2015. This is not to say you should go into debt to donate to charity, but you can make contributions on your credit card and pay with funds from next year.

So go through your recycled junk-mail bag and your email inbox and find some of those charitable appeals. Both you and the charitable organization will win.

Happy Giving and Happy Holidays to everyone.

 

Stephen J. Ganns

Stephen J. Ganns, CPA
914-682-7007
steve@gannscpa.com
www.gannscpa.com

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