As we are about to end 2017, many people will donate to charities at this time due to the holiday season. As a taxpayer, you may benefit from giving to your favorite charity, because you may be able to claim a deduction for the donation on your federal income tax return.
Here are some reminders to consider:
The donation must be made to a qualified charity. Gifts to individuals, political organizations, or to candidates are not deductible. As a taxpayer, you can check the status of a charity. Please check here for more information.
Itemize deductions. To claim this deduction, as a taxpayer, you must file form 1040 and itemized your deductions. To do this, taxpayers must complete form Schedule A, Itemized Deductions on their tax return.
Getting something in return. As a taxpayer, you may receive something in return for your donation. This return may include things such as merchandise, meals, and event tickets. Please note that as a taxpayer you can only deduct the amount of donation that is more than the fair market value of the item you received. To figure a deduction, you would subtract the value of the item they received from the amount of the donation.
Type of Donation. If you donate property instead of cash, you can only deduct the fair market value of the donated item. Fair market value is the price you would get if they sold the item on the open market. If you donate used clothing and household items, those items must be in good condition. Please note certain rules apply to certain types of property, such as cars and boats.
Donations of $250 or more. If you donate $250 or more in cash or goods, you must receive a written receipt from the charity. The statement from the charity must show the dollar amount of the donation, a description of any property given, whether the taxpayer received any goods or services in enhance for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.
Disclaimer: This blog is for information purposes only and is not intended to provide investing, accounting, tax or legal advice and should not be relied upon.