Herald Journal, Jan. 2, 2006
End-of-the-year tips on charitable giving
By Liz Hellmann
Just because Santa has packed up his sleigh for the year, doesn’t mean the gift giving has to stop.
Many people donate to charities and worthy causes throughout the year. Taking time to organize these donations at the beginning and throughout the year may lead to rewards from Uncle Sam during the tax season.
“The biggest thing people can do is to have good records,” Certified Public Accountant Gerard Stifter of Winsted said. “There’s nothing better than plain having good records that were made when you paid the expense.”
Stifter will even jot down the amount of an offering he gave in church on the bulletin from that Sunday, which helps to show he was actually there.
Stifter cautions that his hand-made note may not stand up, but it is better than nothing.
“Going back in March and writing down what you did is not good documentation as far as the IRS is concerned,” Stifter said.
A number of charities are also making good record keeping a little easier by accepting credit cards.
Generous givers can then just keep the credit card statement detailing the contribution, a more credible solution than handwritten notes.
The website www.justgive.org lists a number of charities that take credit cards, and is a good source for donating, according to Michelle Purcell of Purcell Tax Service in New Germany.
Good records are a good idea for all donations, but receipts are a must for larger contributions.
Any donation of $250 or more requires a receipt in order to claim a deduction, according to Stifter and Purcell.
Giving twice that amount or more requires a receipt, along with the name and address of the benefitting organization.
Recording non-cash donations
If newly-found resolutions leave aspiring altruists unloading unused possessions at the local thrift store, a receipt documenting the fair market value is needed.
For example, when donating clothes, don’t just dump them into a bin at the store.
Instead, ask for a worker to glance through the items to be donated and write out a receipt based on their value.
Then, save the receipt and deduct the amount from next year’s taxes.
This method works well for furniture and clothing. Vehicle donations are a little trickier.
If someone uses their car for a charitable purpose, such as delivering meals to people, gas is deductible at 14 cents a mile, according to Stifter.
Of course, an accurate record of mileage must be kept.
Just plain donating a car can be tricky, and doesn’t necessarily lend itself to a deduction, depending on how it is done.
“Select a charity that will either use or improve it,” Purcell advised. “If they sell it, they have to send you a form saying what they sold it for, and then deduct that amount.”
Going to a charity event can pay off as well, but depends on how much is actually donated.
For example, if someone goes to a $50 dinner fundraiser, they cannot deduct $50 from their taxes.
Since they are getting a service, the dinner, they must find out what the price of the dinner is (most charities will provide a dollar amount) and deduct it from the $50.
“Let’s say you go to a $50 dinner, and the dinner is worth $20, you can receive a $30 deductible,” Stifter said.
The same principle applies to silent auctions. Take the difference of the value of the item(s) purchased and the amount paid for them.
Although tax deductions are not intended to be the sole motivator for giving, they are certainly welcomed by many, but only attainable through well-kept records.