7 Things You Should Know about Donating

All things considered, we live in a very charitable country. There are tens of thousands of 501(c)(3) organizations out there helping in all sorts of ways. What’s more, the government rewards us for supporting these non-profits by allowing us to write donations off on our taxes. When you donate, however, there are some things to keep in mind. Here are seven of them.

1. In order for you to get a charitable donation write-off, the organization you donate to must be qualified by the IRS. Qualified organizations are called “exempt organizations.” In general, individuals, political organizations and political parties are not exempt. Exempt charities are 501(c)(3) organizations or religious organizations. To ensure your organization is tax exempt, you can check with the IRS online at http://apps.irs.gov/app/eos.

2. Some charities are scams. You can’t believe that every caller asking for donations in the name of veterans or the police is on the up-and-up. Educate yourself about charity scams. Protect yourself by asking for written documentation, and never give your financial information over the phone. If you are doubtful about an organization’s authenticity, check with the IRS.

3. There are differences between cash and non-cash donations. Non-cash donations may require a different form be submitted at tax time. No matter what you are donating, though, you must maintain a record of the donation through a receipt from the organization, through a pay stub (if you donate via payroll) or a bank record.

4. If you receive something for your contribution (a product or service, for example), you cannot deduct the value of the product or service. You can, however, deduct anything over the fair market value of the item. Insubstantial value goods received don’t reduce the value of your donation.

5. You can donate more than cash. You can also donate property and items and deduct the fair market value. Contact a CPA to find out what the rules are and how to go about donating property. For donations to organizations like the Salvation Army, make a list of what you give and value the items. Only items in good or excellent condition are eligible for donation. Take a photo of what you donate to support your list. The Salvation Army has a list online of what used goods are worth. Certain other rules apply to donations of this kind, however.

6. You can also donate appreciated securities. If you were going to sell a stock at a gain and then donate the funds to your favorite charity, don’t! Donate the stock and you get a deduction for the fair market value of the stock. Then you don’t have to pay capital gains tax. If you are going to donate stock that is worth less than you paid, sell it in your name, take the loss on your taxes and a deduction for the funds you donate to the charity.

7. Remember donations of cars have special rules. Contact a CPA for information.

We think giving is a great way to make the world a better place while you reduce your own taxes. It’s a win-win. Just make sure when you do donate and try to write off the donation, you are doing so correctly. A good CPA can help. Contact Myerson & Myerson, CPA’s at 703-753-1040 or via email at info1@mandmcpas.com.

Because you care enough to send the very least!