Sharing the Wealth--Charities and Tax Deductions
By: Nancy | December 20, 2007 | Category: Money
For the past month, I've been coming home to a mailbox filled with letters from charities, asking for end-of-the-year donations. I think I've gotten more of those than I have catalogs and holiday cards combined, this year. And no wonder--charitable giving is down all over the country right now and nonprofits know that the holiday season traditionally brings out the spirit of giving, while people think about making last minute, end-of-the-year contributions for tax deductions.
Whatever motivates you, if you're considering some year-end charitable contributions, I've got some quick tips to help you understand the basic tax rules about charitable giving and to help you find charities you can trust to be good managers of the work they do and the money you send them.
Over the last couple years, the IRS has tightened its rules about keeping record of your donations and about what you donate and how it's valued.
If you're giving a cash, check or credit card donation, you'll need a written record of the transaction from the charity or from your bank, with the name of the charity, the date and the dollar amount of your contribution. Used to be, you only needed a written record of a contribution if it was over $250. Now, if you want the tax credit, you need the paperwork, regardless of the dollar amount.
Have clothing or household items you're boxing up for Goodwill, the Salvation Army or another nonprofit that accepts used goods? The new rule is, what you donate has to be in good, used condition or better for you to receive a tax deduction for the donation. If the stereo's broken or the shirt is full of holes, you won't get a tax break for it. So save the charity the trouble of disposing of it for you and send those things directly to the trash or recycling bin!
I see ads all over the place from charities asking people to donate their used vehicles. It can be a good deal if old Betsy is up on blocks in your yard and you'd need to have it hauled or towed away and you wouldn't expect to get much for it from the junk man. But if you're donating a car, truck, boat or recreational vehicle that's in running condition, primarily for the reason of getting the tax break, you may want to think a little about it. If the charity you donate your vehicle to will in turn sell it at auction, you'll be entitled to claim only the gross proceeds from the sale--which is usually well below Blue Book value. The charity is required by the IRS to contact you after the auction to let you know what that dollar amount was. If, however, the charity you donate your vehicle to improves or uses the vehicle, or if it gives the vehicle or sells it to a person in need at significantly below fair market value, you may then be able to claim the fair market value of the vehicle on your tax return.
Before you entrust your vehicle or cash to a nonprofit, it makes sense to check out the organization--making sure it's reputable and that it manages its programs and funds well. While the overwhelming majority of nonprofits are good organizations that work hard to create change and help the world and its inhabitants, fraudulent "charities" still abound. And they love targeting seniors and anybody else they can get to trust them.
Be wary of any "charity" that phones you, unsolicited, for a contribution and refuses to mail you written information about the organization or its tax ID number when you ask for more facts in writing about it before you give. And never entrust your bank account, credit card or Social Security number to anyone over the phone. I know this sounds like common sense, but when you're on the line with someone skilled at playing on your emotions by telling you that you can help save starving kids in Africa, puppies at the local pound or provide for the children of fallen firefighters, it's easy to let your defenses down and give a potential scammer all the information he or she needs to clean out your checking account.
Your local Better Business Bureau and state regulatory and licensing agencies are good places to find out if an organization you're considering donating to is registered with them or has had complaints filed against it. Online databases like Charity Navigator and Give.org track the work and financial management of hundreds of major nonprofit organizations. And there are also a few specialized financial accountability groups you can find online that track specific types of nonprofits like religious charities.
When you find charities you can trust that are doing work that inspires you, giving to them feels good...not just during the holidays, but anytime.
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We welcome your comments and expect that our conversation will follow the general rules of respectful civil discourse. This is a moderated blog, and we will only post comments from bloggers over 13 years of age that relate to topics on Gov Gab: Your U.S. Government Blog. We will review comments for posting within one business day. You are fully responsible for everything that you submit in your comments, and all posted comments are in the public domain. We do not discriminate against any views, but we reserve the right not to post comments.
A question has come to mind. Can I deduct the value of the donated tree, minus the take-down and stump grinding?
And - how do I put a value on the tree?
Posted by scanner on January 05, 2008 at 09:08 PM EST #
You have a pretty unique situation, so to find out to what extent your tree donation is tax deductible, your best bet is to start with a call to the IRS telephone assistance line: 1-800-829-1040. Regardless of what time zone you're in, you can reach a live human being 7am to 10pm, Monday through Friday. I've used the service in the past and found it helpful.
Your state, county or municipality may also give you a tax break on the tree donation. To find out, contact their respective tax offices. You can find them by searching on USA.gov.
Posted by Nancy on January 07, 2008 at 08:24 AM EST #
Posted by CatBrie on February 16, 2008 at 08:05 PM EST #
Check out the details of the program to see if you and your van qualify (qualification is based on your income and the van's condition).
To see if it would be a better deal to donate your van to charity, start by looking up its Blue Book value http://www.kbb.com/ and then take a look at the IRS tax rules for the amount you can claim for donating it to a charity. It will almost certainly be less than the lowest Blue Book value you see listed, if the charity will end up selling your vehicle at auction. http://www.irs.gov/newsroom/article/0,,id=152030,00.html
Let us know what you end up doing with your van!
Posted by Nancy on February 18, 2008 at 03:11 PM EST #