BET.com shares tips to ensure that your contributions pay off on your tax return.
With the 10th anniversary of September 11, 2001, yesterday and with holidays approaching, it’s not too early to start thinking about how to get tax write-offs to benefit you the most for the upcoming tax season.
If written off correctly, your contribution to the 9/11 memorials, or your donated bag of clothes, may help to lower your tax bill. If you’re looking to get more money back from the government, make sure you document all of your receipts and charitable transactions.
Once you have that out of the way, the IRS shares some tips to ensure your contributions pay off on your tax return. BET.com breaks them down for you:
1. Make sure you give to a qualified organization. Giving money, clothes or shoes away to a cousin or friend is nice, but if you’re looking to write it off on your tax return make sure you give to a “qualified organization.” Churches, synagogues, the Salvation Army, Red Cross and war veteran groups are an example. Homeowner’s associations, individuals, tuition and groups that are run for personal profit are not. For a full list of qualified organizations visit here.
2. When donating, be aware of fair market value. Fair market value is generally the price that property would change hands between a willing buyer and seller who both have reasonable knowledge of the product. If you donate merchandise, tickets to a ball game or other goods and services, you can only deduct the amount that exceeds the fair market value.
3. Don’t give unusable items. Clothing and household items must generally be in “good-used condition” or better to be deductible. Special rules apply to vehicle donations and donations of stock and non-cash property are valued at their fair market value.
4. Record, record, record. We said it before and we’ll say it again, record your donations. No matter the amount, if you plan to deduct a contribution of cash, check or another monetary gift, you must maintain a bank record, payroll deduction record or written communication from the organization to which you donated. The communication must include the name of the organization, the date of the contribution and the amount of the contribution.
If you donate via text message, a copy of a telephone bill meets the record-keeping requirements.
5. If you’re looking to donate an item or a group of similar items valued at more than $5,000, more than likely you will need an appraisal completed by a qualified appraiser. Secure this documentation from a professional before you fill out your IRS form 8283.
Start keeping track of your donations so your efforts can financially pay off in the long run.
For more IRS deduction tips visit here.
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(Photo: Lucy Nicholson/Reuters)