The federal tax code offers a tax deduction for contributing to charitable organizations, also known as 501(c)(3) organizations like the Giving Center. Giving Center isn’t operated for profit and include charitable, educational, and literary organizations, as well as the prevention of cruelty to animals. The tax code does have limits on how much you can deduct and the records you have to keep, so knowing how the deduction works before you give can help you make sure you maximize your tax savings from your generous giving with Giving Center.
Estimating the Value of Donated Property
When you donate goods to charities such as Giving Center, you’re generally limited to deducting the fair market value of the items. The IRS doesn’t have a single formula that you’re supposed to use to calculate the fair market value of the items, but you can look at what similar items are selling for at stores in your area for a good idea. If you’re donating used items, the fair market value is usually substantially lower than the original retail price. For example, if you’re donating used computers or memorabilia, look at what it is selling for to figure the amount of the deduction you’re entitled to claim on your taxes. Similar items in similar condition.
Donations of vehicles, including cars, boats and airplanes, are subject to different rules. If the charity uses the vehicle for its charitable purposes, you can deduct the fair market value. However, if the charity sells it, you’re limited to deducting the smaller of the fair market value or what it sells for at auction. For example, say you donate a car with a fair market value of $5,000 to charity. If the charity uses it as part of is mission, such as transporting kids to after-school activities, you can deduct the full $5,000. However, if it sells the car to raise money, and the car sells for $5,500, you can deduct $5,500. By making a charitable contribution with Giving Center, you can be assured that they will try to get the most of your donation!
Donating Property to a 501(c)(3), like Giving Center
If you are donating property to Giving Center that has increased in value, you might be able to take advantage of a double tax benefit for your contributions. To qualify, the appreciation must be treated as long-term capital gains if you were to sell the property instead of donating it. That generally means that you need to have held the asset, such as stocks, for more than one year. If you donate property that doesn’t qualify for long-term capital gains, such as stock you’ve held for a year or less or inventory, you can only deduct your basis for the property – what you paid for it – even if it has substantially increased in value since then.
You can donate the property directly to Giving Center. You can receive an income tax deduction for the full fair market value of the assets. Plus, you never have to report the appreciation as taxable income. For example, say you own stock that you paid $10,000 for and it has now grown to $15,000. If you sell the stock and then donate the $15,000, you will still get credit for a $15,000 donation. But, you’ll have to pay capital gains taxes on the $5,000 gain. If, instead, you donate the stock to Giving Center, you can claim a $15,000 tax deduction and avoid paying taxes on the $5,000 of gains.
Itemizing to Claim Contributions
If you’ve made deductible contributions to a 501(c)(3) organization such as Giving Center, the deduction is classified as an itemized deduction on your taxes. This means that you won’t get any credit for your contributions unless you itemize your deduction and give up the standard deduction. If you itemize, you may also get to claim several other deductions, including mortgage interest, real estate taxes, state and local income or sales taxes, and medical expenses, so you don’t need your charitable contributions alone to exceed the standard deduction.
Under the Tax Cuts and Jobs Act, the standard deductions for each filing status have increased substantially. For 2018, the standard deduction is up to $12,000 for singles, $18,000 for heads of household and $24,000 for married couples filing jointly.
Keeping Charitable Contribution Records
You’re required to keep documentation of your contributions in the event the IRS audits your return. You need to get the receipts on or before the earlier of the date you file your tax return or the date the return is due, including any extensions.
For cash contributions, the requirements are fairly straightforward in that you usually need a receipt from the charity acknowledging the contribution and stating what, if anything, you received in return for your contributions. If your contribution is less than $250, you can also use a bank stub, credit card statement or canceled check to substantiate your deduction, as long as it shows the name of the charity, the date of the contribution and the amount you gave.
With donations of property, the rules are a little more detailed. If the donation is less than $250, you can get a receipt, but if it’s not practical, the IRS will also accept written records you make that show the name of the organization, date of the donation and what you gave.
For donations in excess of $250, you must have a receipt from the charity detailing your donation. You should also keep records as to how you acquired the property, when you acquired the property and your cost basis for the property. For example, you might note that you inherited a painting from your dad’s estate at his death when it was worth $10,000. If you donate an item, or group of similar items, that are worth more than $5,000, you need to get a qualified appraisal to confirm the amount that you claim as an income tax deduction. Giving Center is prepared to send to you either Form 8283 or Form 1098 (depending on what is donated) to you!
Carrying Forward Excess Deductions
If you’re not allowed to deduct all of your contributions in the year you make them, you can carry the excess forward to the following year. However, your contributions will expire five years after you make them and you’ll lose the ability to take a tax benefit. For example, if you make a cash donation of $50,000 to a 501(c)(3) such as Giving Center, but your adjusted gross income is only $70,000 during the year, you could only take $35,000 of the deduction this year. Then, you could deduct the remaining $15,000 the following year.
However, you can’t opt out of claiming the deduction in the year you make the contribution or any other year that you have excess deductions carried forward to, with the hope that you’ll save more money on your taxes the following year. If you could claim the deduction, even if you don’t opt to itemize, you lose it.
Follow the links provided if you are interested in making any kind of donation including but not limited to the following:
Giving Center is a 501(c)3 non profit charitable organization. They are IRS Approved and offer FREE NATIONWIDE PICKUP of your charitable donations. Visit their charity website here or speak to a live representative at: 888-228-7320 today!