Wednesday, December 11, 2013
 
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Give and receive this holiday season:
Charitable donations reap tax rewards

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[December 11, 2013]  CHICAGO Donations to not-for-profit organizations are usually ramped up during the holiday season, and if you plan to spread charity and generosity, remember that your good deed can be rewarded when you get the benefit of your contribution as a deduction on your tax return.

The Illinois CPA Society recommends following these steps to be sure you maximize your generosity while complying with IRS requirements:
  • Keep good records. All monetary contributions, regardless of the amount, must be documented with a receipt and a bank record such as a canceled check. Written acknowledgement is needed if the donation is $250 or more. You'll also need receipts for donated gifts, such as clothing or appliances, and for any expenses.

  • Consider using a credit card so you'll always have an automatic receipt. Checks are also better than cash since they provide accepted proof of a donation.

  • Check if the charity is qualified by the IRS. Contributions of any kind are not deductible unless the donation is made to a qualified charity. To find out if the charity is qualified, check the IRS website:
    http://www.irs.gov/charities/
    article/0,,id=96136,00.html
    .

  • Make sure you're giving to a legitimate charity. Use sites such as the American Institute of Philanthropy's www.charitywatch.org, www.charitynavigator.org or www.guidestar.org to be sure the charity is a legitimate organization that uses its money wisely.

  • Don't assume all donated goods qualify for a deduction. Items you donate must be in "good used condition or better." While not well clarified by the IRS, it basically means no damaged or well-worn clothing or broken-down appliances.

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  • Be honest on the value of items. You may deduct only the fair market value of donated goods like old clothing. Market value is the amount a potential buyer will pay a willing seller. Market value is not the purchase price, but more like the amount someone would pay at a thrift store.

  • Watch your timing. Donations must be made before the end of the year in order to get a 2013 tax deduction. Contributions by check are considered by the date they are mailed, not the date they are written or when the check clears.

Keep in mind that donations must also be of "meaningful use" to a charity. These rules generally apply to household items such as furniture, appliances and electronics, but not to art, gems or antiques. Vehicles have their own set of rules, which can also be found on the IRS website.

When in doubt, consult with a CPA. If you need a CPA, use the "Find a CPA" directory on the Illinois CPA Society website, www.icpas.org, where more information is also available.

[Text from file received from Illinois CPA Society]

The Illinois CPA Society, founded in 1903, is the fourth-largest state CPA group in the nation, with more than 23,000 members. It is the premier professional organization that represents CPAs in Illinois. For more than a century, the society has advanced the highest ethical and financial standards of the profession and remains a leader in educating the public on financial issues.

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