Every penny counts, right? And tax deductions for charitable contributions really add up. Here's how to get your due.
How to give back—and stay in your holiday budget
- The IRS requires material donations—clothing, furniture, appliances—to be in good or better condition. It sounds subjective, and, largely, it is. But ask yourself why you're giving the item away. If it's because it's broken or ripped, leave it off your list of deductions (and next time, out of your bag of donations—things that need to be repaired often end up costing the charity more money).
- Prove it. The IRS doesn't require this, but it doesn't hurt to snap a picture of the items, says Bob DiQuollo, a financial planner in New Jersey. "We don't know what the chances of someone asking you for that are, but there is an onus on whoever is going to take the tax deduction, so you need to be aware."
- Ask for a receipt. You'd be surprised by how many people don't do this. If you make a donation to charity, whether it's a few bucks or $100, you have to have it documented to claim it on your return. A canceled check, bank or credit card statement will work, as will a letter or receipt from the charity that specifies the date and amount you gave.
- If you give more than $250, you also need a letter from the charity stating what, if any, goods or services you received in return, including the value of those. So if you paid $500 for a ticket to a charity dinner, you're not getting a tax break on the dinner you were served.