It is that most wonderful time of the year when every day becomes a mad scramble to attend parties, meet family obligations, buy gifts, and in between, get work done. The holiday season engenders feelings of nostalgia, hope and gratitude. And, with that, we spend incredible sums of money, sometimes without thinking. Generosity is a virtue so here are some basic tips on giving to those in need without giving it away wastefully:
· If you are not already familiar with the organization to which you are donating, do some research to be sure it is legitimate. IRS.gov select check: https://www.irs.gov/charities-non-profits/exempt-organizations-select-check
· Contributions to specific individuals, non-qualified organizations, political organizations and candidates are not deductible. Be cautious with crowdfunding websites like Go Fund Me, YouCaring and Generosity. Oftentimes, those contributions are not deductible.
· You’ll need some sort of written proof (cancelled check, credit card statement, etc.). If you donate $250 or more, you must receive a written acknowledgment from the charity. If you donate cash, your best bet is to simply ask for a receipt.
· If you receive a benefit from your contribution such as merchandise, tickets or membership rewards then you can only deduct the amount of your contribution less the fair market value of these benefits.
· Donating property can be tricky. The most common property, such as clothing and household items, should be usable condition. Vehicle donations are subject to additional rules. Appraisals may be needed for valuable property exceeding $5,000.
· We are sorry to report that you cannot deduct the value of your time! You can, however, deduct costs incurred such as certain travel expenses, uniforms and supplies.
· Gifts must be made by December 31, 2016 to be included in your 2016 tax return.
· Oh, and of course: make sure you will actually itemize deductions on your tax returns!
There is certainly the possibility that future tax reform could significantly impact the deductibility of charitable contributions. One version of President-Elect Trump’s tax plan involves ceilings on itemized deductions which includes donations to charity. Similar plans being proffered by Congress, however, preserve charitable giving so there is reason to be optimistic. For now, you can feel confident in giving generously and prudently!