The year-end charitable giving season is upon us. If you itemize your deductions, here are some tips to ensure you don't miss out on the federal tax rewards available for basic charitable contributions:
Meet the substantiation requirements. For any cash contribution, you must maintain a record, such as a cancelled check, bank or credit card statement or a written statement from the charity. For contributions of property, the receipt will need to reflect the fair value of the property donated. Donated clothing or household goods must be in at least "good used condition" to be deductible. If your contribution is $250 or more, you must have a written acknowledgment from the organization.
Meet the reporting requirements. If you have made a gift of property in excess of $500, you must file Form 8283. Cars and boats in excess of $500, or other property in excess of $5,000, require an appraisal and additional requirements.
Understand the timing rules. Contributions made by check are considered delivered on the date they are mailed. However, you may take a deduction for a contribution charged on your credit card in 2011 even though you do not pay the credit card bill until 2012.
Confirm that the organization qualifies. Make sure your donations are made to an organization qualified to receive deductible contributions. The IRS Website (www.irs.gov) lists most qualified organizations in "Publication 78."
Do not deduct contributions of services you donate. You may only deduct mileage and out-of-pocket expenses paid in providing services to a charity.
Give appreciated property to charity. Donate certain appreciated property to charity to avoid paying capital gains on the property your sold. However, stocks that have declined in value should be sold, and the proceeds given to charity so you can take the capital loss and the charitable deduction.
Fundraising events. If your contribution entitles you to receive merchandise, goods or services in return-such as admission to a charity banquet or sporting event-you can deduct only the amount that exceeds the fair market value of the benefit received.
Please consult with your tax professional to ensure that your contributions meet all of the deductibility requirements. Deductions may be limited due to your adjusted gross income or the type of property you are contributing.
Barbara J. Querry is a Certified Public Accountant with Barbara J. Querry LLC. She may be reached at (808) 856-8137 or visit her website at www.mauitaxcpa.com.