How do you know what donations are deductible? How much of your donations can be used to reduce our taxes, and what records do you need to support it?
Here’s what we know:
Which Organizations Qualify?
An organization must be IRS-approved for you to get a tax credit. Approved organizations are classified by the IRS as 501(c)(3). They fall into the following categories:
- Nonprofit religious groups
- Nonprofit educational groups
- Nonprofit charitable groups
If you’re not sure if the organization you’re donating to is IRS-approved, ask for their tax ID number. The IRS website list each organization’s Exempt status by their tax ID.
Mission Generation, Inc. tax ID is EIN#: 76-0324439 which is a Texas non-profit corporation and a qualified charitable organization under §501(c) (3) of the Internal Revenue Code established in 1990.
Cash These include the donations you make using cash, check, credit card, debit card, payroll deduction, cryptocurrencies and automatic withdrawals from your bank account. There are some exceptions to the rule, so please confirm with your accountant or tax professional.
Non-Cash These include most forms of financial instruments – stocks, bonds, equities, insurance, annuities etc.
Property These are generally referred it as Gifts-in-kind. Property donations are anything of value – land, boats, automobiles, planes, ships as well as clothing and household goods. To be deductible these items must be in good used condition or better. Your tax write-off for these types of donations is generally based on the fair market value of the property at the time of the gift. The giver determines the value of the property, not the recipient.
When Do You Need a Receipt?
Cash Several times throughout the year we find ourselves spontaneously giving small cash gifts to different organizations. Whether you’re throwing a $20 check into the collection plate at church or dropping a few dollars into the Salvation Army bucket at Christmas time, it all adds up. But if you’re planning on deducting a cash donation, regardless of the amount, you must prove the donations with bank records, such as:
• Bank or credit union statements
• Canceled checks
• Credit card statements
If you’re donating $250 or more, you’ll also need written acknowledgement of your donation from the organization.
Mission Generation mails all tax-deductible receipts January 25-28.
Property Do you take a trip to Goodwill every time you clean your closet? Any time you make an in-kind donation, regardless of the amount, you should get a receipt. But what about the unattended drop-off sites? If it’s impossible or impractical to get a receipt for your in-kind donation (and your total donations for the year are valued at less than $250), keeping your own reliable written record for each item donated will suffice. The IRS recommends taking a picture of each item along with a written log to substantiate these types of donations.
For any in-kind donations you make of $250 or more, however, you’ll need a receipt. Remember that every situation is unique. If you’ve made a charitable contribution and want to learn more about the tax implications, consult the IRS website.
There’s only a few days left in the year. If you still haven’t had a chance to donate all you want to write off your taxes, please think of Mission Generation first. Thank you and be bless in 2018 and all the years to come.
Disclaimer: This Information is not meant to replace the advice of your account, CPA or tax professional. Please consult a tax professional before making any decision impacting your taxes.