Taxes, Donations and Lending a Hand

In the tradition of tax years past, it’s the season to talk about charitable contributions!

Charitable donations are an excellent way to reduce your tax burden for the year, all while doing something for the greater good. But as with everything in tax law, there are rules that need to be followed.

For one, you can only take advantage of charitable contributions if you itemize. You report itemized deductions on a schedule A on your federal form 1040 on lines 16-19 (see below):

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Next, cash deductions, regardless of the amount, must be substantiated by a bank record (such as a canceled check or credit card receipt) or in writing from the organization. The writing must include the date, the amount and the organization that received the donation.

For donations of non-cash items, the rule is that you can generally take a deduction for the fair market value of the items – what the item would sell for in its current condition. Non-cash items must be in “good” condition or better, or the contribution is disallowed. There is an exception to the rule: if the item is valued over $500 but not in “good” condition, you may still take the deduction if you have an appraisal for the item.

Additionally, special rules apply to appreciated goods like stock or jewelry, or hard to value items such as artwork.

To substantiate your donation, you need to obtain a receipt from the charitable organization with the name of the charity; the date of the gift; the location of the charity; and a detailed description of the property donated. The IRS loves folks like my mother when it comes to descriptions. She writes “three men’s dress shirts, good condition; two pairs work shoes, never worn” and so on, noting the condition. That level of description is practically perfect.

As the holiday season approaches, I hope that you’ll remember to be charitable. No matter what your individual situation, you can likely do something good from donating cash to a used prom dress. Even if you can’t claim a donation, you can take a hour out of your week to be a bell-ringer for the Salvation Army, deliver meals to the homeless or shovel some snow for a shut-in. Never underestimate the difference that one person can make.

It’s been a tough year for a lot of folks. Everyone deserves a little happiness at the holidays.

I’d love to hear which charitable organizations you support, or organizations that are actively still looking for donations – I know that Toys for Tots is experiencing a shortage this Christmas and will accept donations through Christmas Eve. Leave your stories and suggestions in the comments below. You never know who you might inspire!

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10 thoughts on “Taxes, Donations and Lending a Hand

  1. Thanks for the invitation, TaxGirl!

    Let me humbly suggest SonPower Ministries (http://www.sonpower.com), a small Pennsylvania nonprofit bringing hope to those behind prison walls.

    I’ve been on the SonPower board for many years and it’s one of the “skinniest” charities I’ve ever been associated with. Tiny budget, big impact, with Gospel services at prisons (both men’s and women’s) throughout the state, plus a regular weekly Bible study at Cumberland County Prison.

    Please check out the website and prayerfully consider a donation at the “Donate Online Store” tab.

    Thanks and God bless!

  2. I like supporting Goods4Good because they “match excess goods from the United States with the needs of vulnerable children in the developing world.”

    We sent 120 inflatable globes to them and they sent them to schools in Malawi.

  3. You’ll get a tax deduction of at least $500 when you donate a car to charity. You can donate your car that no longer runs to Cars4Charities and get it picked up fast and free. They have hundreds of respected charities for you to donate car to.

  4. I’d like to recommend KBOO – a community radio station that not only broadcasts on the radio, but also via the Internet. I’m a volunteer & member of KBOO, who has seen firsthand how opportunities for youth (youth under age 21 also get to participate in developing radio programs to air) and other underrepresented groups enhanced lives, especially during this bleak, economic period.

    For more information, please visit: KBOO

    Many thanks!

    Paula

  5. I support Hospice of the East Bay Foundation here in Northern California. We have thrift shoppes in Walnut Creek, Dublin, Danville, Concord, Alamo and Antioch. Donation of used clothing and household items have been down in 2009 so a little help would be appreciated.

    Our Hospice Foundation raises money to pay for Hospice care for those who do not have Medicare or an insurance Hospice benefit. The Hospice provides pediatrict end-of-life care as long as the usual services. Most of the care occurs in the patient’s homes, skilled nursing facilities, assisted living residences but we also have a 6-bed facility called Bruns House where patients can have 24/7 visitors in a friendly environment.

  6. Blessed are those who can give without remembering, and take without forgetting. offering donations to every charity foundations is a big help for them. Thank you for those have a kind heart.

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