It is the most giving time of the year, and with just weeks left in 2012, non-profits are ready to take your donations in exchange for a slip of paper to include in your tax returns!
According to Charity Navigator, most charities receive over 40 percent of their annual contributions in the last few weeks of the year. So it may be time to clean out, recycle, or get out that check book!
Determine what you care about and where you want to give. Maybe it is a place you have volunteered your time, or a cause that is near and dear to you or your family.
If you are just hearing about a new charity, learn more about the organization by visiting the Better Business Bureau Wise Giving Alliance, GuideStar, or Charity Navigator.
These websites show how the organization uses their donations and their latest financial reports (including how their executives are compensated). They also reveal whether the organization is a qualified 501(c)3, which is a non-profit organization recognized by the government.
How to Donate
Check vs. Cash: For tax-keeping purposes and security reasons, a check is best. When writing out a check, use the official name of the charity and always ask for a receipt.
Many charities also accept credit cards. If donating online, be sure to print the receipt for your records.
And if you texted a donation by phone (such as Red Cross Hurricane Relief) keep a copy of your phone bill as your receipt. The charity does not keep a record of who texted a donation.
When donating items like clothing and furniture, make a list with each item and the approximate value. Ask for a receipt that has the date, name of the organization, and the name and condition of the items. For tax purposes, all donations worth over $250 need a receipt. Many organizations like the Salvation Army, Goodwill, and Habitat for Humanity's ReStore can arrange to collect items from your home. Or you can drive to their drop-off locations. Be sure to check store hours since some are not open on Sundays.
For tax purposes, the last day to give a gift or monetary contribution is December 31 at 11:59 p.m.
Be sure to keep detailed records. Tax laws require receipts with dates, names of charities, and the amount of each contribution.
When donating second-hand clothes, remember they need to have been in good condition, and only deduct the value they would sell for in a thrift shop rather than listing retail value. TurboTax has a tool called “ItsDeductible” that uses eBay to calculate how much your IRS-approved items are worth.
If you have items that are worth more than $500, use the IRS 8283 Form (it can be found on TurboTax).
Be aware, there are restrictions on charitable deductions! For example, donations where you got something in return, volunteer hours, gifts to ineligible non-profits (this goes back to checking out the charity) and giving a car. The IRS will only let you deduct the charity’s auction price for the car, and that amount may not represent the true value of your car. But if the charity uses your car rather than reselling it, you can deduct the vehicle's Kelley Bluebook value.
Other limits on giving: You can deduct cash contributions of up to 50 percent of your Adjusted Gross Income (AGI). You can deduct property contributions up to 30 percent of your AGI. And you can deduct contributions of appreciated capital gains assets up to 20 percent of your AGI. If your contributions exceed these amounts they can carry over into the next year for a maximum of five years.
Learn more about how to give wisely by reading this previously-published KCL article.
So while all of this information will help when Uncle Sam takes his cut, it's just more motivation to put our hearts in the right place this holiday season.
This is a guest post by Amanda from Greensboro, NC
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