Make a year-end donation before the tax deadline, by midnight EST or 9 p.m. PST on December 31, 2016 to receive a deduction on your taxes.
Your donations take care of the people who need it the most. To help you get the most benefits and maximize your donations, below are some helpful tax tips from the IRS that you may not know.
To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
Donors must get a written acknowledgement from the charity for all gifts worth $250 or more. It must include, among other things, a description of the items contributed. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.
Bank records include canceled checks, and bank, credit union and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.
The IRS offers the following additional reminders to help taxpayers plan their holiday and year-end gifts to charity:
Qualified charities. Check that the charity is eligible. Only donations to eligible organizations are tax-deductible. Select Check, a searchable online tool available on IRS.gov, lists most organizations that are eligible to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations. That is true even if they are not listed in the tool’s database.
Year-end gifts. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2016 count for 2016, even if the credit card bill isn’t paid until 2017. Also, checks count for 2016 as long as they are mailed in 2014.
Itemize deductions. For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction. This includes anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2016 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
Please note: Nothing in this article is intended as legal or tax advice. HEAL Haiti recommends that you consult with your personal tax adviser regarding charitable deductions, as your tax circumstances may be different.