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Donating to charities – a review of the basics

Posted on November 4, 2019

Lots of us donate to charities – especially around the holidays. That makes now an especially good time review the basics of donating while understanding what you can (and cannot) claim as a deduction on your tax return.

Deductions can add up quickly, and many deductions can work to reduce the amount of your taxable income – provided you itemize the deductions and have the appropriate proof.

Here’s what to know, according to the CPAs at Teipen Selanders Poynter & Ayres:

  • Familiarize yourself with Tax Exempt Organization Search
 on IRS.gov. Basically, you must give to qualified organizations in order to deduct your donations. This easy to use IRS tool lets you determine whether a specific charity qualifies as a charitable organization for income tax purposes.
  • You can also us IRS.gov’s Charitable Contribution Resource Publication 526.
 It explains how to claim a deduction including:
    • How much you can deduct
    • What records to keep
    • Exactly how to report your contributions.
  • How to determine the value of donated property can be complicated. Check out IRS.gov’s Publication 561, Determining the Value of Donated Property to find out how you can deduct the fair market value of any property you donate.
  • If you have questions about Noncash Charitable Contributions, visit IRS.gov Form 8283. Taxpayers must fill out this form to report noncash charitable contributions if the amount of this deduction is more than $500. The instructions on the form walk taxpayers through the process.
  • Schedule A, or Itemized Dedications,
 is the form needed to accurately track your donations on your tax return.
  • Got another question? Visit IRS.gov and view Frequently asked questions: Qualified charitable distributions
  • Just FYI — Taxpayers aged 70 ½ or older can make a qualified charitable distribution directly from their IRA to an eligible charity in any amount up to $100,000. With some exceptions, this is generally a nontaxable distribution made by the IRA trustee to a charitable organization and counts toward a senior taxpayer’s minimum distribution requirement for the year.

It’s good to know the rules of giving well before the end of the year to avoid any disappointments come tax season.

Need a charitable giving question answered we didn’t cover here? Chances are very good the CPAs at Teipen Selanders Poynter & Ayres can provide a thorough answer. Just pick up the phone and give us a call.