What you need to know before deducting charitable donations on your taxes

Market Trend

What you need to know before deducting charitable donations on your taxes

There are several things you should know before you give donations to a charity. Many people give to charities each year during the holiday season. It’s a great time to help those less fortunate. But remember, if you want to claim a tax deduction for your gifts, you must itemize your deductions.

There are several tax rules that you should know about before you give. Following are six tips that you should keep in mind:

  • Qualified charities. Make sure the charitable organization you give to is a qualified charity.

  • Monetary donations. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return.

  • Household goods. If you donate clothing and other household items to charity, they generally must be in at least good used condition to claim a tax deduction.

  • Records required. You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more.

  • Year-end gifts. If you charge your gift to a credit card before the end of the year, it will count for this tax year. This is true even if you don’t pay the credit card bill until next year.

  • Special rules. Special rules apply if you give a car, boat, or airplane to charity, so do your due diligence before deducting charitable gifts and donations.

May 11, 2021 Product