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Tax Tips for Deducting Year-End Donations

Hopefully you’ve been spreading joy by supporting charities all year long. But if you’ve put off being altruistic since your New Year’s resolutions, now is the time to get in the giving spirit – if you want to deduct donations on your 2014 tax return. That’s because contributions are tax deductible in the year made. So as long as you give to a charity before 12:00 a.m. on 1/1/2015, it can be deducted for 2014 – no matter if the check is still in the mail or the unpaid credit card bill is burning a hole in the filing cabinet.

However, the IRS won’t just take your word for how nice you’ve been. Whether you donate $5, $500, or whatever amount of money, you must have a bank record or written document from the charity with the organization’s name, your contribution amount, and the date. Gifts of money can include cold hard cash, checks, electronic funds transfers, credit card charges, or even payroll deductions.  Just remember to get a written record of such donation.

Maybe you can’t spare some change and instead want to donate clothing or household items. In general, those items must be in good used condition or better in order to be deductible. After all, if something isn’t good enough for you to use, it won’t be good enough for somebody else to use.

Once you drop off an armoire at the Goodwill or shell out money like it grows on trees to save a copse of Appalachian trees, you must get a written acknowledgment from the charity describing the items you contributed, among other things. You’ll need this record for any deductible donation of $250 or more, whether it’s money or property – and it’s in addition to the money documentation noted above.

All that being said, these donations must be made to “qualified” organizations. Only churches, synagogues, temples, mosques, government agencies, and anything which shows up on the Exempt Organizations Select Check have the IRS’ seal of approval. So although you might have splurged on gifts for yourself, you still don’t count as a qualified organization – no matter how often you call yourself a charity case.

You should feel special if you donate a car, boat, or airplane to charity. In fact, the IRS has special rules for these types of donations. If the claimed value is more than $500, the deduction for the vehicle is generally limited to the gross proceeds from its sale, and you’ll need a Form 1098-C or a similar statement, such as a Bill of Sale, from the organization to attach to your tax return; otherwise, you can only deduct $500 for that classic car of yours.

Individuals can only claim deductions for charitable contributions if they itemize their deductions on Form 1040 Schedule A. Of course, whether or not you end up deducting your donations, giving is something you should do year-round. And remember, “It’s not how much we give, but how much love we put into giving.”