Ellen PhillipsWhile I believe it's always beneficial to support charities and those in need, hopefully readers who itemize deductions remember charitable contributions can make a big impact on tax returns.
Most donations to legitimate charities can be deducted, so if taxpayers aren't careful to list everything they donate, they could be missing out.
If you're among the "misser-outers" for your 2014 return, start your 2015 list, but take note of specific IRS rules that ensure the gift you give truly is tax-deductible. (For details, visit IRS.gov.)
Since today's and next week's columns feature taxes, separate Tax Tips won't be added. While I'm no tax expert by any means, my source is the Internal Revenue Service, and it is
First, last and foremost --contributions must be made to a qualified charity. Simply donating money or property to a cause is not enough to qualify for a tax deduction. Qualified charitable organizations are entities based in the U.S. (although some Mexican, Canadian and Israeli charities may qualify) and have been approved for tax-exempt status by the IRS.
To check if a particular organization is qualified to receive tax-deductible charitable contributions, use the IRS' online tool "Exempt Organizations Select Check."
Types of qualified charities usually include:
* Churches and other religious organizations
* Nonprofit charities, such as the Red Cross
* Nonprofit educational groups, such as the Boy or Girl Scouts of America, colleges and museums
* Nonprofit volunteer firefighter companies
* Nonprofit hospitals or medical facilities
For a contribution of cash, check or other monetary gift (regardless of amount), maintain a record of the contribution to include a bank record or a written communication from the qualified organization containing the name of the organization, and the amount and the date of the contribution. Before handing records over to our CPA, I make a copy of cancelled checks and attach them to any receipt I've received from the organization.
In addition to deducting cash contributions, folks generally can deduct the fair market value of any other property you donate to qualified organizations. For any donation of $250 or more (including contributions of cash or property), obtain and keep in your records a written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.
Regardless of whether the charity is a church, a local Teen Challenge, or whatever, I attach a specific listing of each article donated per charitable organization and the IRS-approved fair market value for each. (I obtained my own from and cited the Good Will Valuation Worksheet.)
If you claim a deduction for a contribution of noncash property worth more than $5,000, you'll need a qualified appraisal of the noncash property. Special rules apply to donations of certain types of property such as automobiles, inventory and investments that have appreciated in value. For more information, refer to Publication 526, Charitable Contributions. For information on determining the value of your noncash contributions, refer to Publication 561, "Determining the Value of Donated Property."
Ellen Phillips consumer column appears each Sunday. She may be reached at consumerwatch@timesfreepress.com