It may be the “season of giving,” but the days left in December are dwindling and Iowans who need to make charitable contributions before the new year arrives to help their tax picture need to get moving.
IRS spokesman Christopher Miller says if you plan to make a year-end gift to charity, several important tax laws have changed in recent years. First, you need proof you made the donation.
“Get a written record of the transaction,” Miller says. “That can be a cancelled check, a bank or credit card statement, or a letter or reciept from the organization. That receipt or bank record allows you to prove the donation if a question ever does arise with the IRS.”
Many Iowans will make an effort during December to sort through some of the things that have collected in their houses and closets during the past year, from linens to electronics to furniture.
“If you’re making a donation of clothing or items from around the house, which a lot of us do,” Miller says, “that needs to be in good used condition or better in order to qualify for a deduction.”
Donors need written acknowledgement from the charity for all gifts worth $250 or more. It must include, among other things, a description of the items contributed.
Some Iowans will decide they have an extra vehicle in the garage or perhaps a watercraft in storage that they just don’t use or need anymore.
“Special rules apply for donating a car or a boat,” Miller says. “You’re generally going to be limited in the deduction for how much that item sells for. The organizations that accept cars or boats are aware of these new rules and they’ll be ready to give you this information.”
For payroll deductions, the taxpayer needs to keep a pay stub, a Form W-2 wage statement or other proof from the employer showing the total amount withheld for charity, along with the pledge card showing the charity’s name.
Contributions are deductible in the year they’re made, so, donations charged to a credit card before the end of 2015 count for 2015, even if the credit card bill isn’t paid until 2016. Also, checks count for 2015 as long as they are mailed in 2015.
Only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. That deduction is not available to Iowans who choose the standard deduction, including anyone who uses the short form, like Form 1040A or 1040EZ.
Find more tips at www.irs.gov.