The Internal Revenue Service has issued a reminder to individuals that there are many important tax law provisions which have recently gone into effect regarding gifting; here are some of the highlights:
1. Charitable contributions
If you donate household items to charity it must be in good used condition or better in order to be tax deductable. If you claim a deduction of over $500 on clothing or a household item you don’t have to meet that standard if you include a qualified appraisal of the item with the return. Also keep in mind that you must receive a written acknowledgement from the charity for all gifts of $250 or more. The receipt must include details and specifically a description of the items contributed. Items which fall into this category are household furnishings, furniture, appliances, clothing and electronics.
2. Monetary donations
If you wish to make charitable donations in cash or by check you must have a bank record or a written statement from the charity in order to deduct any donation of money regardless of the amount involved. The record is required to show the name of the charity, the date of the contribution and the amount of the contribution. Bank records that will help you would be cancelled checks, bank statements and credit card statements. Credit card statements should show the date of the transaction and the name of the charity. If you make a donation by payroll deduction you should retain your paystub, a W2 or other document from the employer showing the total amount withheld for charity. Also keep the pledge cards showing the name of the charity.
Also keep in mind that you are still required to obtain an acknowledgement form from a charity for each donation you wish to deduct where you have contributed $250 or more.
Other Important Points to Keep in Mind
1. Your donations are only deductible if they go to eligible organizations such as most churches, temples, mosques, synagogues and government agencies.
2. Keep in mind deductions are only valid in the year they are made. Donations made by check written in 2014 are deductible in 2014, donations charged to your credit before the end of 2014 are also deductible in 2014 even if the credit card bill isn’t paid until 2015.
3. Donations records
For all donations that you make get a receipt from the charity which includes the name of the charity, a detailed description of the donation including the amount and the date of the contribution. If you dropped something off a site and there was no one there to give you receipts keep a written record of the donation that includes the same information as well as the fair market value of the property.