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6 IRS Tips for Year-End Gifts to Charity

Posted by: Zaher Fallahi
Posted On: Nov 17, 2014

Many people give to charity each year during the holiday season. Remember, if you want to claim a tax deduction for your gifts, you must itemize your deductions. There are several tax rules that you should know about before you give.  Here are six tips from the IRS that you should keep in mind:

1. Qualified charities. You can only deduct gifts you give to qualified charities otherwise known as 501(c) (3).  Examples are churches, synagogues, temples, mosques and government agencies. If not sure, ask the organization.

2. Monetary donations.  Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written receipt form the charity to deduct your donation on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution.  Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.

3. Household goods.  Household items include furniture, furnishings, electronics, appliances and linens. If you donate clothing and household items to charity they generally must be in at least good used condition to claim a tax deduction. If you claim a deduction of over $500 for an item it doesn’t have to meet this standard if you include a qualified appraisal of the item with your tax return.

4. Records required.  You must get a receipt for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.

5. Year-end gifts.  You can deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2014. This is true even if you don’t pay the credit card bill until 2015. Also, a check will count for 2014 as long as you mail it in 2014.

6. Special rules. Special rules if you give a car, boat or airplane to charity. For more information visit IRS.gov.

Note: non-charitable gift of less than $14,000 per person per year doesn’t require filing a gift tax return. The amount is not deductible either. Each person can make up to $5,340,000 (this will be $5,430,000 in 2015) such gifts in her or his life-e time without paying gift taxes, but must file gift tax reruns for an item of more than $14,000 per person per year.

Zaher Fallahi, Attorney At Law, CPA, is a California Tax Attorney, practices as Los Angeles Tax Defense Attorney and Orange County Tax Defense Attorney, specializing in Report of Foreign Bank and Financial Accounts (FBAR), the Offshore Voluntary Disclosure Program (OVDP), and Foreign Trust . Telephones: LA (310) 719-1040 and Orange County (714) 546-4272, e-mail: taxattorney@zfcpa.com