To deduct contributions, follow the rules
Did you donate a car to a charitable organization in 2015, or some clothing to the church thrift shop? Maybe you made a cash contribution to your alma mater or in memory of a loved one.
If you want to take a deduction for the donation, you have to itemize deductions on your tax return. But there’s more to it than that. First, you have to make sure the organization to which you’re donating is a qualified charity.
Furthermore, the money can’t be targeted to a particular individual, even if it’s going through that charity, said Dave Du Val, vice president for consumer advocacy at taxaudit.com.
He uses this example: Say you’re driving to Goodwill to drop off some clothes and you see a homeless man in the street. You give him one of the coats that you were planning to donate. “It suits [you] well in the next life, but it’s not a deduction,” he said.
Similarly, if your neighbors’ house burns down and your church starts a fund to help them rebuild, a contribution to the fund isn’t deductible, Du Val said. However, if the church has a fund to help people in need, but not specifically your neighbor, you could take the deduction.
Charge or check, but not cash
For a contribution of money to be deductible, you need proof that you made the donation. That could be a canceled check or an itemized line on your credit card statement.
So, Du Val said, if you put a $10 bill in the bucket of a Salvation Army bell ringer, that’s not deductible. But if you wrote out a check to the Salvation Army and put that in the bucket, it is.
If the contribution is more than $250, you also will need a receipt from the organization.
If the charity sends you a “gift” to entice your contribution, or you attend a fundraising banquet, your deduction will be affected. The Internal Revenue Service makes clear, “If you get something in return for your donation, your donation is limited. You can only deduct the amount of your gift that is more than the value of what you got in return.”
The IRS lists possible items received for donations, including meals, merchandise or tickets. Charitable organizations often will include on your receipt the amount that is deductible.
— AP
