‘Tis the season for charitable contributions
Year-end charitable contributions are a win-win situation for both taxpayers and charities, according to the Minnesota Society of Certified Public Accountants (MNCPA).
Remember to follow smart practices for giving to make sure organizations receive your gift in time and you receive the appropriate tax credit.
Regardless of whether you’re donating to your favorite charity or giving to a new organization, follow these tips to ensure everyone benefits from your donation:
● Research first. Only donations to qualified charitable organizations are deductible. If you’re not sure whether an organization is qualified, ask to see its letter from the Internal Revenue Service or search online at www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.
Churches, synagogues, temples and mosques are considered de facto charitable organizations and are eligible to receive deductible donations, even if they’re not on the list.
● Get receipts. Cash deductions must be substantiated by a bank record or in writing from the
organization. The writing must include date, amount and organization that received the donation.
● Be an itemizer. To claim charitable deductions on your tax return, you must itemize your deductions on Schedule A of your Federal Form 1040.
● Do the math. If you receive something in exchange for your donation, no matter how big or small, the donation is deductible only for the amount the donation exceeds the value of goods or services received.
● Document. Be sure to keep good records of all donations. If you donate non-cash items, you’ll need to substantiate the value of your donation.
● Know your limits. There are limits on the amount of charitable contributions you can deduct. Consult your Certified Public Accountant (CPA) if you contribute more than 20 percent of your adjusted gross income.
● Watch the calendar. Donations must be made by the end of the tax year for which you want to claim the deduction.
● Keep pay stubs. If you have money taken directly out of your paycheck for charity, keep a pay stub, Form W-2 or other document showing the amount withheld, along with the pledge card showing the name of the charity.
● Donate appreciated property. Taxpayers can donate appreciated property instead of cash to a charity.
For more information, contact a local CPA, visit www.mncpa.org/referral or call 1-800-331-4288.