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Reduce Your Tax Bill

By Accurately Deducting Charitable Gifts

April 1, 2017


People give to charity for many heartfelt, altruistic reasons. But as evident by the surge in online gifts flowing through our site at the end of the year (33% of the money processed via our Giving Basket in 2017 took place in the last week of the year), the tax benefits of giving do impact our decision to support charities. We shouldn’t take issue with donors who are motivated by the tax benefits of giving. In fact, many worthy charities are funded by donors who are able to make larger gifts as a result of the tax deductions they later claim.

But before you prepare your tax return, you should know that the government continues to be concerned with taxpayers inflating the value of their gifts. In recent years, new laws have been passed to curb those who abuse the spirit of such tax breaks. And the IRS continues to scrutinize claims for charitable deductions to make sure taxpayers are entitled to such claims.

To help you maximize the tax benefits of your charitable endeavors and avoid making a false claim, Charity Navigator offers the following tips.

  • Document All Cash Donations
    Donating online via Charity Navigator's Giving Basket helps you fulfill this requirement since all your giving records will be stored in one place enabling you to quickly obtain an annual record of your charitable giving for tax preparation.
  • Monetary Gifts of $250 or more Require Additional Documentation If you contribute $250 or more, then you must prove to the IRS that you (a) made the donation and (b) you didn't receive anything in return for that donation. Therefore you’ll need a receipt from the charity that includes the following information: the charity’s name, the value of your gift, the date you made your donation and a statement verifying that you did not receive any goods or services in return for your gift.
  • Be Careful When Valuing a Donated Vehicle
  • Make Sure Donated Clothing and Household Items Are In Good Condition

Keep in mind that the above rules are predicated on the following conditions.

  • You Itemize
    You must itemize in order to take a charitable deduction. Make sure that if you itemize, your total deductions are greater than the standard deduction. If they're not, stick with the standard deduction.
  • You Donated to a Qualified Charitable Organization
    Just because an organization is exempt from income tax doesn't mean that contributions to the organization are tax-deductible. For example, 501(c) (4) organizations, like the Disabled American Veterans or the National Rifle Association of America, are allowed to spend a substantial portion of their revenue on lobbying our government so not every donation to them is tax-deductible. All of the organizations rated by Charity Navigator are 501(c) (3) public charities to which all donations are tax deductible. For the unrated organizations listed on our site, we list the subsection of the tax code that the group belongs to so you can easily determine if gifts to it qualify for a deduction. 
  • Your Gift Was Made in Time
    If you were among the many donors that gave online on December 31st, then your gift still qualifies for a deduction on your tax return even though you paid the credit card company in the following year. If you waited until the last minute and paid by check, your gift qualifies so long as the check was mailed on or before December 31.

You can learn more about the tax implications of charitable giving in our FAQs. And visit our blog to learn more about the IRA Charitable Rollover which has been made permanent.

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