Everyone likes the warm fuzzies they get this time of year from charitable giving. And, when you are careful and follow the rules, the IRS can give you tax breaks. There are some cool things you can do with charitable giving to better reap the tax benefits. Starting after Christmas (on the 26th), we’ll look at a few in a series on taxes and charitable giving.
Meanwhile, keep a few things in mind about charitable giving in general, whether you give to the March of Dimes or to your local church congregation.
- Read the Charitable Contributions guidelines from the IRS Publication 526 (available online at IRS.gov). This will give you a good idea of what you need, and what qualifies.
- Double check the charity. There are plenty of scams and look-alikes that do not have the proper tax status for you to take a deduction. Charities must have 501(c)(3) designation to count. You can get an idea of how well a charity performs by visiting the following Web sites: American Institute of Philanthropy, the BBB’s Wise Giving Alliance and Charity Navigator. Do not ever give when solicited by email, especially following a disaster.
- Keep records of your charitable giving. It is important to keep records of your giving. The Salvation Army provides a receipt for the value of goods brought in (must be in good, usable condition), as do many other Goodwill-type thrift stores. Get the receipt. Also, many organizations like St. Jude’s and the March of Dimes will send you a thank you letter when you mail in contributions. Save the letters. If you write checks, save the stubs or carbon copies, or images of the cleared checks given you by your bank. Rather than putting money in a collection plate at church, go to the congregational leader separately and write a check (and ask for a receipt). The LDS Church has a rather ingenious system whereby congregants fill out a slip to accompany their contributions, and at the end of the year they are provided with an itemized list that can be used as documentation of their annual contributions.
Read the next entry in this series: Using Your IRA to Give.