FINANCIAL: Gifts That Keep on Giving

By Tenlee Lund

The holiday season is a time of special benevolence, a time when many of us wish to contribute to our favorite charities. In fact, charitable giving can have a double benefit, not only helping the organizations that help those less fortunate, but also offering a gift to the giver, which will be most appreciated right around April 15th.

Done correctly, every cent of your charitable gift will to go your chosen charity and, as long as it is a qualified organization (and you have your documentation), you can claim the appropriate tax deduction. Qualified organizations fall into five basic categories and can be found in the IRS Publication 78 or on the Internet at apps.irs.gov/app/pub-78. Donations made directly to individuals, political organizations, or candidates are not deductible.

While supporting a worthwhile cause is commendable, keeping the required paperwork to claim a tax deduction can be downright vexing, particularly since the IRS rules keep changing. But here are some of the basic rules to help you through it:

• Keep your receipt. Always ask for a receipt that includes the organization’s name, the date of your donation, and the dollar amount. Simply keeping a list of everything that was contributed is not enough.
• Consider writing a check. These days, a monetary gift, no matter how small, requires a receipt, which is automatically provided by a canceled check. For a cash gift, you’ll need a bank statement or a written acknowledgement from the charity.
• Used clothing and household items must be in “good used condition” or better to qualify for a deduction of the “wholesale fair-market value.” Therefore, you may want to keep a photographic or video record of the items you give. You will still need a receipt and, if any of the items exceed $500, you will also need to include a qualified appraisal. If the total of the entire non-cash contribution exceeds $5,000, you will need to file Form 8283.
• Used car donations have special rules. Usually, you can deduct only the sales price collected by the charity when it sells your vehicle. However, you may be able to deduct the vehicle’s fair-market value if the charity gives or sells it to a person or family that needs it for transportation. You can also deduct the fair-market value if it is less than $500.
• Be especially careful when, with a gift to a charity, you receive something in return. You can only deduct the difference as a donation. For example, if you contribute $100 but you receive $75 theater tickets in return, your deduction is limited to the $25 difference.
• And don’t forget to deduct your mileage driving to and from charitable endeavors, such as board meetings, scout meetings, or church trips. Although the deduction, set by statute, is still fourteen cents per mile, it adds up.

In order to take advantage of any of this, you must itemize your deductions on your tax return. Although Congress has been considering a charitable tax deduction for non-itemizers, it has yet to become a reality.

For more information, visit the IRS website, www.irs.gov and search for “tips for charitable tax deductions.” You can also request Publication 526, Charitable Contributions, by calling 1-800-829-3676 (1-800-TAX-FORM) or find it online at the IRS website.

And happy giving during this most charitable of seasons.

If there is a financial topic you would like to see covered in LCJM, contact Tenlee Lund at tenlee@lakecountryjournal.com or (218) 828-6424, ext. 23.