Donating to charity is a great idea, and may even afford you a tax deduction. It’s necessary that you keep a clear and accurate record of your charitable contributions in order to qualify for a tax deductions. You will need a hard copy record of the donation if you want to deduct it on your tax return. This record can include:
- A canceled check
- Bank records that show the front of the check (a monthly statement)
- Bank or credit card statement that depicts a credit or debit entry for charity
- Written statement from the charity documenting the name of the organization, the date of donation, and the amount.
If you donate weekly to a church, you’ll need to write a check and place it in the collection plate, unless you use church provided “envelopes”, in which you’ll obtain a receipt for your total donation at the end of the year. The IRS does not accept a statement saying you put $5 bills into the plate each week. There must be documented proof.
If your contribution is more than $250 in a single gift, the charity must provide you with a written acknowledgment when the donation is received. It’s important that this statement include the name of the charity, their physical address, the date of the donation and the amount received. It’s also important that the statement “No goods or services were provided by the organization in return for the contribution,” be included on the receipt to ensure you were not provided any other gifts for making the donation.
You are able to claim a deduction of fair market value for clothes, household goods, food, furniture and other common items. You can’t rely on the charity to assess the fair market value, as many will not. Instead you must determine the value on your own.
Your records should be specific and detailed when donating. For example, writing “Three new pairs of dress pants”, would be sufficient. You should list the condition of the item – excellent, good, and new – somewhere on the record. Remember, you can only deduct items that are donated in good condition or above.
You can’t write off a bag of clothes donated to Goodwill unless you have a list of everything that was in the bag. And don’t forget, if the value exceeds $250, you must have a written receipt in order to claim a deduction.