Not all donations can be written off on your taxes. For example, a donation to a private party or individual does not count. If you donate your time to an organization, you may not deduct the value of your time either. In this post we’ll take a closer look at what is required to receive credit for charitable donations.
Qualified Organizations Only
The organization that you donate to must be a 501-3c to qualify for a tax credit. These are verified as non-profit organizations. The IRS also offers an IRS Exempt Organizations Select Check search option on the IRS.gov website so that you can see if your organization of choice is there.
Keep all of your receipts and make sure to get one. Get receipts for cash donations as well. This is proof of your donation to the organization should disputes of validity come into play.
Any time that an organization or charity event advertises gifts for donations, the value of those gifts may offset the donation amount. In some cases, the entire donation amount can be disqualified if an incentive was received. It is important to deduct the value of the incentive received from the donation amount.
Document Values of Donated Goods
Every item has a value. Document the value of the goods being donated and have those values reflected on a receipt. You may also have an organization representative sign an itemized list of goods and their values.
It is important to be aware of the status of the organization you wish to donate to. You may think that you are helping a great organization and will receive a tax credit and end up discovering otherwise. Do your homework before making a charitable donation.
Image credit: Mike Mozart