Charitable Contributions - Copy 1

Mar 6, 2014 | By: Michael Blanchard

Charitable contributions have specific reporting rules and ramifications. Here are a few.

March 06, 2014

Charitable Donations:

As we are working through the tax season, one of the common areas where questions arise is in regard to charitable giving. Many people make donations to charities whose work they support, but if you are planning to take a tax deduction for your gift, you must have the proper paperwork. Assembling the right documentation can also be tricky because the requirements vary based on whether the donation is cash and on the value of your gift. If you donate less than $250 in cash, for example, a canceled check, credit card statement or similar record may be sufficient, but if you give more, you will need a written acknowledgement from the charity. An additional tax form—and possibly an appraisal—may be needed for non-cash donations, depending on their value. Of course, the organization itself must also qualify as a charity under IRS rules.

A few common issues that we address:

  • Gifts directly to other people do not count as a deductible contribution (note - large gifts may require a gift tax return to be filed).
  • Political contributions don't qualify as a charitable contribution but can qualify you for a credit of up to $100 on your Oregon return.
  • Spending some time doing inventory on your non-cash items can pay off. Often people assume that they can "only deduct the $500 limit," but when they actually spend some time looking at the value of what they donated, they can take a deduction for much more. The truth is, if you claim more than $500 there are additional forms to include on your return, but you must have the same supporting documentation in your files.   
  •  If you don't have written acknowledgement at the time of the contribution, don't give up. The IRS wants you to have the letter in your possession by the time you file the return, so even if you have to extend your return you can get the paperwork needed to support the deduction.
  • Finally - understand that charitable giving means you are actually giving something away. The tax reduction that you receive is only a percentage of the total you receive - so you should choose organizations that you really care about, and ensure that they are spending the money wisely.

Need advice?

We can offer advice that will make it possible for you to help fund the causes you believe in and qualify for the deductions you deserve. We can also help you incorporate charitable giving into your long-term tax and estate planning. Be sure to contact us with all of your questions on charitable giving or any other financial concern.

JGC can assist you in determining if you have filing requirements for any of these forms and help you prepare and file them electronically.

Call to talk with one of our local experts at 503.390.7880.

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