Summary of What You Need to Know

March 2017

The good news is that you may enjoy tax savings by deducting personal charitable donations on your tax return. The less than good news is that the federal income tax rules are complicated. So here’s a summary of what you need to know to claim your deductions as a charitable donor and taxpayer.

The Basics

 Your contributions must actually be paid in cash or property no later than the end of your tax year to qualify as a deduction.

Your charitable write-off may be limited to 20%, 30% or 50% of your adjusted gross income (AGI). The determining factors include whether you contribute cash or property as well as the category of charitable organization, e.g. public charities vs. private foundations. Learn more here

There is a five year carryover provision for contributions that exceed the annual AGI limit.

Tips for Deducting Charitable Contributions

 As you may imagine, the IRS has reams of info on charitable contributions, to what entities they may be made, deductible limits and proof of the donated amount value. Here’s a synopsis of tips offered by the IRS. If you so choose, learn more here.

A note of explanation on IRS Tip #7 as it is often misunderstood. The only acceptable proof of a donation greater than $250 is a letter from the charity acknowledging the gift. The letter must clearly state that no goods or services were received as a result of the donation. That means a cancelled check or credit card statement is not acceptable proof that your donation be deemed deductible. So … no letter, no deduction.

• You must itemize deductions to deduct a charitable contribution.

• If your contribution results in a benefit to you, you may deduct only the fair market value of the benefit received.

• Stock or other non-cash property is usually valued at fair market value. Click here to learn more

• Clothing and household items must be in “good” condition or better. Vehicle, boat and plane donations are subject to special rules.

• Maintain written documentation of your donations whether cash or non-cash.

• Donated items valued at more than $5,000 generally require an appraisal.

Of course, depending on the specifics of your circumstances, there are many other factors that may affect deductibility of your charitable giving. Please give us a call. We’re happy to work with you to make sure you maximize your rightful deductions.