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.
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.