Charitable Giving Around the Holidays
Are you feeling extra jolly this holiday season? Before giving to your favorite holiday charities, be sure to get informed.
Holiday donations often pair with the tax-friendly charitable deduction–but be wary of the gifts that won’t qualify for the benefit. Read on to learn how to fine-tune your charitable holiday giving and save cash on your upcoming tax return filing.
Why Should I Donate During the Holidays?
The act of donating to your favorite holiday charities sparks a sense of good-deed. Those on the fence may wonder, what is the value of holiday donations on your tax return? In order to claim gifts to holiday charities, the giver must itemize deductions on their tax return.
Contributions made to a qualified charity are only deductible within the year a contribution is made. Keep in mind, if you make a contribution via credit card, the gift is deductible when it’s charged. Not when you pay the bill!
- For cash donations that are less than $250, it is generally sufficient to keep a bank statement, receipt, or other record that shows the name of the organization, date the contribution was made, and the amount of the contribution.
- For cash contributions of $250 or more, no deduction is allowed unless you have a receipt or other written confirmation from the charity – a canceled check alone is not enough. If you are in the 25% bracket, that $1,000 donation receipt could be worth up to $250 in tax savings.
- If you donate property with a combined value more than $250 you will have to have a statement from the charity acknowledging the contribution.
- For property worth more than $5,000, you will also need to include a qualified appraisal on your return.
- The IRS only permits deductions for donations of clothing and household items that are in “good condition or better.” Special rules apply to vehicle donations.
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