No one enjoys thinking about income taxes, but tax season will be here before you know it. As you already know, advance preparation can help you identify many important deductions that can potentially save you a lot of money. But since many of these deductions require you to take action during the calendar year, it can often be too late to access them if you wait until the spring.
One such deduction is the one you can take for your charitable donations. The IRS will only let you count deductions you made by December 31 of this year, so now is the time to act.
Make sure your charities are qualified. Contrary to popular belief, you can’t just donate money to anyone and write it off on your taxes. The IRS maintains a list of qualified charities, and you should check to make sure your favorite organization is on the list. Otherwise, you can also donate money to churches, temples, synagogues, mosques, or government organizations agencies, even if they aren’t on the list.
Keep accurate records. If you make donations of cash or household goods, ask for a receipt that shows the name of the charity, the date of the donation, and the dollar amount. If you donate by debit or credit card, your statements will suffice – although you might spend a bit of time combing through them. Remember, if you claim a deduction of 500 dollars or more for a single item, it’s best to get a qualified appraisal to back up your claim.
Remember to claim the correct value. The last thing you want is to lose valuable deductions in the event of an audit, and wind up owing money to the IRS. Remember that you can only claim the fair market value of used household goods that you donate. If you receive anything in return for your donation, you must subtract its value from the amount that you donated. For example, if you purchase a painting at a charity auction for 4,000 dollars, and it is valued at 3,000 dollars, you can only claim a deduction of 1,000 dollars.
Make your donations now. In order to count charitable donations on your 2015 tax return, you must make them by December 31. Take action now to make sure you can claim the maximum deduction for your tax bracket.
For more help with claiming your charitable donations, call our office at (781) 995-0253 to schedule an appointment.
Portions of this article have been excerpted from IRS Special Edition Tax Tip 2014-23, November 17, 2014.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.