As the year-end approaches there are a few items about tax deductions for charitable contributions to note that may help you gather your tax information for the current year as well as help yourself become more organized going forward.
You must keep records of all contributions being reported in order to qualify for a tax deduction. The easiest way to track this is to make your cash contributions online whenever it is possible. The organization will send you a confirmation email for your records. This email will contain all the details you need to validate your charitable contribution, including the organization, the donor, amount of contribution, and date. Most email confirmations will even include a statement that contributions made to the organization qualify as a tax deduction. You should save this email in an inbox folder designated for tax documents or specifically charitable contributions.
Other qualified organizations will mail you a hard copy confirmation of your charitable contribution. The average person will open this notice, tuck it away somewhere and totally forget about it comes tax season. Do yourself a favor and scan that confirmation letter and save it in your tax documents folder. If your email provider uses a document retention system, like Google Documents, you could just use that as well.
If you have made charitable contributions and do not receive a confirmation from the qualified organization, you should make a list noting the date, organization, amount of contribution, check number, or description of items if applicable. Please note if you have contributed to an organization and have received a gift or attended an event your tax deduction is only the amount that exceeds the fair market value of the item or service you have received.
It is also important to keep records of non-cash charitable contributions. In most cases organizations will not assess a value to a large group of small donated items such as furniture or clothing. It is up to the taxpayer to keep records and assign a fair market value of the items donated. Please contact the CLloyd Group for a handy guide to valuing these items for your tax deduction.