Charitable Contributions to foreign charities

Under the domestic organization requirement, to qualify as a donee organization eligible to receive tax-deductible contributions from an individual, the recipient charitable organization must be created under the laws of the U.S. (or those of any state, the District of Columbia, or any possession of the U.S.), except as otherwise provided in an international tax treaty. However, contributions may be used in a foreign country for charitable purposes.

Tax Deductions to Foreign Charities

Interest in international charitable giving has increased to the point that it has become a significant tax planning issue for many financial advisors, estate planners and accountants. The easiest way for most individuals to make contributions to foreign charities is to donate to domestic charities or donor-directed funds involved with international efforts or program.

 

 

Deducting Charitable Contributions to foreign charities

The inquiry about the deductibility of a contribution doesn’t stop with the determination that an amount has been paid to a qualified donee organization. If the amount is earmarked for use by a non-U.S. organization, then, to determine whether the domestic organization requirement has been met, it’s necessary to look beyond the fact that the immediate recipient is a qualified donee. Thus, specifically, if you make your contributions to a domestic organization which in turn makes grants to foreign charitable groups, they will be deductible if they are subject to the domestic organization’s control and aren’t earmarked in any way for use abroad. For example, if the domestic organization is required (perhaps by a specific provision in its charter) to turn particular contributions it receives over to a foreign organization, then IRS would consider the ultimate foreign recipient to be the real donee and the contribution would not be deductible. Otherwise, the “organized in U.S.” rule would be nullified.

Giving to Foreign Charities

Over the years, many foreign charitable groups have created, or established ties with, a U.S. charity in a relationship approved by IRS as meeting the above requirements though the domestic organization turns over contributions to a particular foreign organization.

What Foreign Charities Qualify for IRS Tax Deductions?

Such an organization specifically targets its support for a charitable organization located in a foreign country, and is often called a “friends of” organization, the term often included as part of its legal name to reveal the close affinity. Generally, they exercise the requisite “discretion and control,” even if the domestic organization serves as a grant-making organization and doesn’t conduct a variety of charitable activities abroad.

 

How to make tax deductible contributions for foreign charities

Another option you might consider is arranging with an appropriate U.S. charity to accept your contribution and then, perhaps because it desires to further the foreign organization’s work, turn over part or all of the amount to the foreign organization. Of course, you must ascertain that IRS requirements have been met. Be aware that when a domestic organization solicits grants for foreign groups, it must: • review and approve the grants as being in furtherance of its own purposes; and • maintain full control of the donated funds and discretion as to their use. Incidentally, if you are using an intermediary organization that is classified as a private foundation, the determination that the foreign organization is a qualified organization must be based on the grantee’s affidavit or on counsel’s opinion. IRS has provided a form for the grantee’s affidavit.

Use of “conduit” charitable contributions

Generally, donors may earmark their contributions in various ways. However, depending on who has control, IRS may look beyond the immediate recipient to determine if the donee is a qualified charitable donee.

 

“Conduit” contributions for noncharitable use

“Conduit” contributions for noncharitable use. A gift to a qualified charity intended for noncharitable use may in some instances be deductible if the charity is the ultimate donee and not a mere conduit. Thus, the charity must have full and unconditional control and not be a mere conduit. This can be a difficult line to draw. For example, a gift to a college for acquiring or constructing houses for use by a designated fraternity was deductible, even though direct gifts to social fraternities aren’t deductible. As used by the college, it was considered incidental to its educational purpose. However, a contribution to a charity that preserved local landmarks, for use to renovate a social club’s fraternity building, wasn’t deductible even though the building was a registered landmark, because it was solicited exclusively for the fraternity and was considered earmarked to benefit primarily a noncharitable recipient.

 

Contributions to foreign charities

Contributions to foreign charities through “conduits.” If a contribution is paid to a qualified donee organization-for example, a “friends of” organization-it may be used by a non-U.S. organization (which cannot be so qualified) if the contribution is subject to the domestic organization’s control and isn’t earmarked in any way for use abroad.

 

Designated contributions for individual beneficiaries.

Designated contributions for individual beneficiaries. Similarly, a contribution designated for individual beneficiaries may be deductible if the contribution is under the charity’s full and unconditional control and may be used for its functions as it considers best.

 

What is a qualified charitable mission?

For example, a contribution to a qualified charitable mission that was designated for the support of particular missionaries was deductible because the designation was no more than a manifestation of the donor’s desire to have his donation credited to those missionaries’ support. The donor knew and intended that his contribution would go into a common pool to be distributed only as the mission itself determined.

 

Tax Exempt Charitable Interest

However, a contribution to a tax-exempt educational institution providing training for ordained ministers that was earmarked for a particular student (the donor’s son) by the use of account numbers linking donors to seminarians and by indicating the student’s name on the contribution envelopes wasn’t deductible, because the donor intended to benefit the designated student and the tax-exempt organization did not have full control of the donated funds.

Designated contributions for disaster victims

Designated contributions for disaster victims. Contributions to tax-exempt charitable organizations that are earmarked for victims of various IRS specified disasters are deductible (though gifts to individuals aren’t deductible) if they are not earmarked for the relief of any particular individual or family.

 

Donating Credit Card Points or Rewards to Charity Tax Deduction

A charitable contribution deduction is allowed for the portion of rebated credit card purchases (credit card points or credit card miles) that are transferred to a qualified charity.  However, unlike contributions charged to a credit card, these rebate contributions are not actually made by the use of the card. Rather, they are held by the credit card company in a custodial account for disbursement to charity.

 

When can you deduct donated credit card points on tax return?

Accordingly, the charitable contribution is made (and deductible) when the rebates are transferred to the designated charity. To be deductible, the taxpayer must have the choice of donating the rebate or receiving it himself. Also, a credit card company’s automatic transfer of a certain percentage of the taxpayer’s charges to charity is nondeductible, even if the taxpayer designates the charity, since that amount was never available to the taxpayer. Similar to credit card rebates, rebates from a web-mall vendor that the taxpayer irrevocably chooses to donate to charity, rather than receiving them in cash, are tax  deductible in a similar way that donations to charity via credit points and airline miles are.

 

How to deduct charitable donation with credit card points?

Cardholders will normally receive a periodic statement from the credit card company showing the amount transferred to charity on their behalf and when the transfers occurred. If the amount transferred at one time is $250 or more, the taxpayer must receive a written acknowledgment from the charity before a deduction is allowed. In this instance, the credit card company will normally provide the charity with the name and address of the taxpayer. However, in some instances, it may be necessary for the taxpayer to follow up with the credit card company and/or charity to ensure he receives all of the information necessary for claiming the charitable contribution deduction; i.e., the date of the contribution by the credit card company must be included.

 

Donating Credit Card Reward Points

Most large credit card companies will do this for their credit card holders who are making deductible contributions with their cards.

Tips from IRS for Year-End Gifts to Charity

2015 charitable donation tax changes individuals and businesses making year-end gifts to charity. There are several important tax law provisions have taken effect in recent years that taxpayers making charitable contributions must be aware of. Some of the charitable contribution changes taxpayers should keep in mind include:

Rules for Charitable Contributions of Clothing and Household Items

Household items include furniture, furnishings, electronics, appliances and linens. Clothing and household items donated to charity generally must be in good used condition or better to be tax-deductible. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

 

Written acknowledgement from the charity for all gifts worth $250 or more

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more. It must include, among other things, a description of the items contributed.

 

Guidelines for Monetary Donations to Charities

A taxpayer must have a bank record or a written statement from the charity in order to deduct any donation of money, regardless of amount. The record must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, and bank, credit union and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

 

Donating Money to a Charity

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

 

Reminders about making year-end Charitable Gifts in 2015

The IRS offers the following additional reminders to help taxpayers plan their holiday and year-end gifts to charity:

  • Qualified charities. Check that the charity is eligible. Only donations to eligible organizations are tax-deductible. Select Check, a searchable online tool available on IRS.gov, lists most organizations that are eligible to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations. That is true even if they are not listed in the tool’s database.
  • Year-end gifts. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2015 count for 2015, even if the credit card bill isn’t paid until 2016. Also, checks count for 2015 as long as they are mailed in 2015.
  • Itemize deductions. For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction. This includes anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2015 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
  • Record donations. For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
  • Special Rules. The deduction for a car, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.

 

Form 8283 for Charitable Contributions in 2015

If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

IRS.gov has additional information on charitable giving, including:

Charitable Deduction Rules for Disasters

That was an overview of the basic rules about charitable contributions. But sometimes these rules are temporarily superseded by special rules and regulations. For example, Congress can enact special rules for a particular disaster. One type of legislation like that was enacted on January 22 of this year by President Obama who signed into law the Haiti Assistance Income Tax Incentive Act. This legislation allowed taxpayers to choose to deduct certain contributions made in the calendar year 2010 on their 2009 return instead of their 2010 return which won’t be filed until next year.

 

New Charitable Deduction Rules

In order to take those charitable contributions made in 2010 on their 2009 return, those contributions had to have been made after January 11, 2010, and before March 1, 2010, and they had to have been made for the relief of victims in the areas affected by the January 12, 2010, earthquake in Haiti.

 

What is the Heartland Disaster Relief Act?

A second type of legislation, the Heartland Disaster Relief Act, was enacted after severe storms, flooding, and tornadoes occurred in the Midwestern states in the summer of 2008. It made it easier for individuals and businesses to engage in charity on behalf of those affected by that disaster. In that particular case, the normal contribution limits—the percentage limitations—were suspended in order to allow individuals and businesses to give more than they normally would. In addition, the legislation set a higher standard mileage rate for taxpayers who used their vehicles to provide charitable services for those individuals in that Midwestern storm disaster area. It was only a temporary increase in the standard mileage rate. It was enacted by Congress in order to raise that mileage rate temporarily, but it’s back down to 14 cents now. A third type of legislation was the Katrina Emergency Tax Relief Act.

 

IRS Storm Relief Legislation

The intent of this type of legislation was to help victims deal with their losses and to make it easier for those around the country to help out the victims of the Katrina disaster. To find out what special rules might be in place for a particular disaster situation, you can look at the IRS website. If you click on the ‘Around the Nation’ link from the ‘Newsroom’ page on the IRS website, the link there will lead you to information about a particular disaster. It will describe any tax relief or special rules for people responding to those particular disasters.

Charitable Deduction Vocabulary

When making charitable contributions for taxes, it is very useful to know certain vocabulary rules. This page provides an overview of some of the most common terms used for making charitable contributions on a tax return.

 

Contemporaneous Written Acknowledgment

A written statement needed to deduct a charitable contribution of $250 or more. The contemporaneous written acknowledgment must have a description of the volunteer’s services performed. It also has to have the dates of the services performed. The volunteer has to have this acknowledgment by the earlier of the time the volunteer files the return claiming the deduction or the due date of the return, including extensions. A good source for learning more is Publication 1771, Charitable Contributions—Substantiation and Disclosure Requirements. All of the acknowledgment rules fall under § 170(f)(8).

 

Form 990

This form, Return from Organization Exempt from Income Tax, is used by taxexempt organizations, nonexempt charitable trusts, and section 527 political organizations to provide the IRS with the information required by section 6033. Under section 501(c), 527, or 4947(a)(1) of the Internal Revenue Code (except private foundations). It is an information return (it is not a tax return) most mid-to-large-size, tax-exempt organizations must file with the Internal Revenue Service every year. The form is used to report revenues, expenses, activities, governance, relationships, and transactions.

 

What is an IRS Qualified Organization?

A domestic organization recognized as tax exempt under IRC § 501(c)(3) or a federal, state, or local government. Becoming a Qualified Organization involves completing a Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Section 501(c)(3) tax-exempt organizations can be operated only for certain purposes. These purposes may include religious, charitable, educational, scientific, literary, prevention of cruelty to children or animals, or fostering national or international amateur sports competition.

 

What is Schedule O?

This schedule, Supplemental Information to Form 990 or 990-EZ, is the only schedule that all Form 990 filers are required to file. It provides supplemental information to describe or explain the organization’s responses to questions contained in the core form and schedules.

Deducting Volunteering Expenses for Charity on Tax Return

First  only individuals who itemize their deductions on Schedule A of their 1040 can deduct charitable contributions. By our last count, only about a third of all taxpayers do that. So for the many non-itemizing taxpayers, any charitable contributions they make are not deductible.

 

Itemizing Expenses and Deducting Charitable Work Expenses

So for an itemizer, expenses that may be deductible are the ones that the volunteer receives no reimbursement for because, obviously, if a volunteer gets reimbursed, then there’s no out-of-pocket expense to deduct. So in order to be deductible, the unreimbursed expense has to be incurred in the volunteer activity that is directly connected to the work of the qualifying charity. And qualifying charity is a domestic organization recognized as tax exempt under IRC § 501(c)(3) or a federal, state, or local government. Any out-of-pocket expenses a volunteer might incur on behalf of not a 501(c)(3), so for example, a social welfare organization that’s exempt under (c)(4) or business league under (c)(6), would not be deductible.

 

What kind of expenses can volunteer deduct?

A volunteer may not deduct certain out-of-pocket expenses even when the expenses may facilitate the volunteer’s service to the charity. For example, as detailed in IRS Publication 526, the following personal expenses incurred by a volunteer are not deductible: babysitting expenses—a payment to a volunteer’s babysitter for the time the volunteer spends performing the services to the charity; travel expenses—the volunteer’s travel expenses for a trip during which the volunteer performed only limited work on behalf of the charity; clothing—purchase or dry cleaning of clothing that the volunteer uses during a service to the charity, but may also be used when he or she is not volunteering; and the cost of the volunteer’s food or drink while a volunteer is working if that work does not require the volunteer to be away from home overnight.

 

Example of Volunteer Charitable Expense Deductions

So let’s say, for example, that the volunteer goes on a sailing trip, and on his sailing trip, the volunteer agrees to count whales for eight hours a day. The IRS generally wouldn’t treat this cost—the cost of that sailing trip—as deductible because there’s a significant element of personal pleasure, recreation, or vacation in sailing trips in general.

 

What kind of Charitable Expense Deductions are Allowed?

So I guess it depends. If the time of the year is bad weather for sailing— if it’s cold, if it’s not a typical time of the year that people go on recreational sailing trips—then maybe the outcome would be different. Maybe the IRS would consider that a charitable contribution, but it really depends on the facts and circumstances.

 

Deducting Travel Expenses as Volunteer

The Internal Revenue Code specifically states that there’s no deduction for any travel expenses unless there’s no significant element of personal pleasure, recreation, or vacation in such travel. That doesn’t mean that the volunteer can’t enjoy volunteer work—that, in and of itself, doesn’t give it a significant element of personal pleasure, vacation, or recreation. It also doesn’t mean that the volunteer can’t do something fun at the end of the day. But it just means that, for a full workday, the volunteer has to be there for the volunteer work, and there can’t be a significant element of personal pleasure, recreation, or vacation in general. And you can find that in § 170(k) of the Internal Revenue Code.

Treating Foster Care Payments for Taxes

This information applies to taxpayers taking a foster child into your home-for reasons other than profit-and that an agency is going to make monthly payments to you for so long as you provide the foster care. Topics discussed include how you should treat those payments for tax purposes, whether you can deduct your expenses in raising the foster child, and whether there are any other tax aspects to providing foster care. There are many tax benefits to running a foster home.

 

Exclusion of the payments from the agency from your income.

You will be able to exclude the payments only if the payments are made under a foster care program of a state or local government and the agency making the payments is either part of the state or local government or is licensed or certified by the state or local government.

 

Foster Care Payments and Income Tax

Also, the agency which is placing the child with you must be either part of the state or local government or licensed or certified by the state or local government. If your foster child has no physical, mental or emotional handicaps, another requirement for exclusion is that the payments be made for caring for the child in your principal home. The payments must be made because you are paying expenses in supporting the child and not for the value of your services.

 

 

What are acceptable foster care payments?

Expenses for the support of the child include expenses for shelter, food, utilities, furniture and household incidentals, recreation, transportation, clothing, education, medical care, grooming and other personal needs and a spending allowance. If your child has a physical, mental or emotional handicap, you can also exclude from income any payments which the payor designates in writing as having been made because (and which are actually made because) the state has determined that the payments are necessary to compensate you, beyond your expenses, for additional care provided by you in your principal home because of the handicap.

 

Charitable deductions for unreimbursed expenses.

If the placing agency is a government agency or an agency exempt from income taxes and eligible to receive contributions for which the giver can get a charitable deduction, you can get a charitable deduction for unreimbursed out-of-pocket expenses paid by you for the support of the child. Support includes those expenses described above for the income exclusion.
You should keep records of the expenses to meet the general requirements for a charitable deduction and so that the purposes of the payments to you can be compared with the expenses for which you wish to take a charitable deduction. Any portion of the payments to you that doesn’t reimburse you for those expenses won’t reduce your charitable deduction, even if the portion is excludible from your income as described above. For example, say that you receive $10,000 of excludible payments from the agency, of which $4,000 is allocable to your out-of-pocket expenses for the child, and $6,000 to indirect expenses, such as the child’s share of the cost of shelter. (One way to make this allocation is by consulting the manual used by the agency that makes the payments.)

Your actual out-of-pocket expenses amount to $5,000. In that case, you will be entitled to a $1,000 charitable deduction ($5,000 # $4,000) in addition to the $10,000 exclusion. The records should include an expense journal (noting the purpose, amount, date and payee for each expense), cancelled checks and receipts. You will also need to get from the placement agency, each year before the earlier of when you file your return or the return due date (including extensions), a written statement containing a description of the service you are performing, the dates of service, a statement of whether or not the agency is providing any goods and services to you in exchange for your unreimbursed expenses and, if so, a description and good faith estimate of the value of such goods and services.

Charitable Deduction for Foster Care Expenses

To qualify for the charitable deduction, the expenses must be paid during the tax year, should be for the exclusive benefit of your foster child and shouldn’t be paid to buy or improve property in which you retain any interest. You may, however, deduct an allocable share of a collective family expense. For example, you may deduct the share of your utility bills reflecting the additional use necessitated by the foster child.

This discussion of your possible charitable deduction assumes that none of your expenses are for property, which, if you sold it, would require you to report a tax gain and that no single item of property that you contribute to your child’s support is worth more than $500. You should be aware also that there are overall limitations on the total amount of charitable deductions you are allowed for a year. They depend on the nature of the placement agency and the other organizations to which you make charitable contributions, the nature and use of any non-cash contributions which you make to other organizations and possible carryovers of deferred charitable deductions to the tax year in question.

 

Dependency deduction for foster child

You can claim a dependency deduction for a foster child for any year in which the child had same principal place of abode as you for more than half the year and didn’t provide more than half of his or her own support. It makes no difference how much income the child had, so long as the child (1) was less than 19 years of age at year-end or (2) was less than 24 years of age at year-end and was a full-time student for five months during the year.

In determining whether the child provided more than half of his or her own support, payments you receive for care of the foster child from a child placement agency are considered support provided by the agency. Similarly, payments from a state or county for foster care are considered support provided by the state or county.

 

Head-of-household filing status.

If your foster child qualifies as your dependent under the above rules, and (a) you paid more than half the cost of keeping up your home for the year, (b) you are unmarried the end of the tax year, (c) you aren’t a “surviving spouse” (that is, your spouse didn’t die in the two years before this tax year and you meet certain other requirements), and (d) you weren’t a nonresident alien at any time during the tax year, then you are entitled to file your income tax return as “head of household.”

Why Use Head of Household Tax Filing Status with Foster Children?

This entitles you to lower tax rates and a higher standard deduction than single taxpayers or married taxpayers who file separate returns.

Appraisal for Charitable Contributions

When you as an individual donate property to charity, you may be required to get an appraisal. This is necessary for the charity and for IRS tax purposes. If you do not get an appraisal when donating property to a charity, the IRS may not let you take a deduction on your tax return for the fair market value of the property donated. Other rules apply, but in almost all cases an accurate appraisal for charitable contributions is a necessary starting point.

 

When does IRS need an appraisal for charitable contributions?

The IRS requires donors and donee organizations to supply certain information to prove a taxpayer’s right to deduct charitable contributions. If you donate an item (or a group of similar items) of property worth more than $5,000, certain appraisa requirements apply. You must get a “qualified appraisal,” attach an “appraisal summary” to the first tax return on which the deduction is claimed, include other information with the return, and maintain certain records. Again, the charitable deduction is only as good as the appraisal supporting it.

 

What is an IRS Qualified Appraisal?

You must receive the qualified appraisal before your tax return is due. While a court has allowed taxpayers some latitude in meeting the “qualified appraisal,” I think you should aim for exact compliance. The qualified appraisal isn’t submitted to IRS in most cases. Instead, the appraisal summary, which is a separate statement prepared on an IRS form, is attached to the donor’s tax return. However, a copy of the appraisal must be attached for gifts of art valued at $20,000 or more and for all gifts of property valued at more than $500,000, other than inventory, publicly-traded stock, and intellectual property. If an item has been appraised at $50,000 or more, you can ask IRS to issue a “Statement of Value” which can be used to substantiate the value.

 

Failure to comply with the appraisal requirements

The penalty for a taxpayer’s failure to get a qualified appraisal and attach an appraisal summary to his return is denial of th charitable deduction. The deduction may be lost even if the property was valued correctly. There is an exception if the failure was due to reasonable cause.

 

Exceptions to qualified appraisal requirement

A qualified appraisal isn’t required for contributions of:

  •  a car, boat, or airplane for which the deduction is limited to the charity’s gross sales proceeds,
  • •stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of business,
  • •publicly-traded securities for which market quotations are “readily available,” and
  • qualified intellectual property, such as a patent.

 

Partially Completed Appraisal Summary

Also, only a partially completed appraisal summary must be attached to the tax return for contributions of:

  • nonpublicly-traded stock for which the claimed deduction is greater than $5,000 and doesn’t
  • exceed $10,000; and
  •  publicly-traded securities for which market quotations aren’t “readily available.”

IRS Rules for Charitable Appraisal

Application of rules where two or more gifts are made. If you make gifts of two or more properties during a tax year, even to multiple donees, the claimed values of all property of the same category or type (such as stamps, paintings, books, non-publicly traded stock, land, jewelry, furniture, or toys) are added together in determining whether the $5,000 or $10,000 limits are exceeded.

A “qualified appraisal” is a complex and detailed document. It must be prepared and signed by a qualified appraiser. An “appraisal summary” is a summary of a qualified appraisal made on Form 8283 and attached to the donor’s return.

Advice on Year-End Charitable Contributions to Qualified Charities

Every year during the holiday season many people donate to charities for more reasons than a tax deduction. However, remember, if you want to claim a tax deduction for donations must itemize your deductions when you file taxes for the tax year.. There are several tax rules you need to know before making a donation. Here are six tips from the IRS that should help people make best use of their contributions to charities.

 

Qualified organizations eligible for deductions

Qualified organizations eligible for deductions. You can only deduct donations on your tax return made ​​to qualified charities. Use the tool IRS Select Check to see if the group you are making the donation to qualifies as a qualified charity. You may deduct donations made ​​to churches, synagogues, temples, mosques and government agencies.

 

Monetary donations to charity

Monetary donations to charity. Monetary donations include those made ​​by cash or check, electronic funds transfer, credit cards and payroll deduction that get sent to a charity. You must have a bank record or written proof of the charity  to deduct any donation on your taxes. The receipt from the financial institution must show the name of the organization and the date and amount of the contribution. Bank records include canceled checks or statements of cooperative credit banks and credit cards. If you contribute through payroll deduction, taxpayers should always maintain a pay stub, W-2 forms or other documentation from the employer employer to prove their charitable deduction. This information should always show the total amount retained as a donation, along with the pledge card showing the name of charity.

 

Household goods donate to charity

Household goods donate to charity. Items include household furniture, household items, electronics, appliances and linens are often donated to charities. If you donate clothing and household items to charity generally must be at least used and in good condition in order to claim a tax deduction. If you claim a deduction of more than $ 500 for an item does not have to meet this requirement by including a qualified receipt with your tax return filing.

 

Required records

Required records. You should get a receipt from the organization for every qualifying deduction (either money or property) of $ 250 or more. Additional rules apply to the declaration for donations of that amount. This statement is in addition to the records necessary to deduct cash donations. However, a statement with all required information could meet both requirements to claim the charitable deduction.

 

New Year gifts.

New Year gifts.  You can deduct contributions in the year makes. If you upload your donation to a credit card before the end of this year, will count for 2014. This is the case but not pay the statement until 2015. A check will also feature 2014 provided it is mailed in 2014.

Advice on Year-End Charitable Contributions to Qualified Charities

Special rules.   Special rules apply if you donate a car, boat or plane to a charity.

The IRS requires that contributions of $250 or more must be substantiated in order to be deductible. The burden is placed on you, as the donor, to request written substantiation because a canceled check may not be sufficient to support a deduction. The amount of the contribution is fully deductible whether it is paid by cash, check or credit card. However, a charitable deduction cannot be based on a mere pledge to pay. The pledge must actually be paid before the end of the year in which the deduction is claimed.

 

Additional Resources from the IRS on Charitable Deductions: