Closing the Books on 2010: Donate To A Charity

This is a blog post from my good friend Tisa Silver's blog www.tisasilver.com / http://tisasilver.wordpress.com/2010/12/20/closing-the-books-on-2010-donate-to-a-charity/#comment-41

This is the first of five in a series of daily posts to help you close the books on 2010 and get a fresh start on 2011!

The end of the year is eleven days away, but there is plenty of time to do something good that can help you while you help others…

Donate to a charity!

This tip is extremely personal to me. In addition to writing books and teaching finance, I am the president of a non-profit organization based in Delaware, the Good Works Coalition. We are a small corporation, our board members make up a large percentage of our volunteer base and we are funded completely by donations from the general public.

Generous donations have allowed us to award over $15,000 in college scholarships since 2007. Those same donations have allowed our contributors (including myself) to claim a deduction on their taxes.

Before you make a year-end charitable contribution, consider the following points:

Contributions are deducted in the year they are made – In order to receive the tax benefit of a charitable contribution for a given tax year, your contribution must be made during the same year. So, if you are looking for a break on your tax return to be filed in 2011, then you need to make your donation by the end of 2010.

Be prepared to wait a bit – Many charities accept online donations, however if you are looking to make a non-monetary contribution (i.e. donating clothes to Goodwill), you should be prepared to encounter some wait time. Every year, plenty of people wait until after Christmas to make their donations.

Tax deduction eligibility- Make sure the organization is recognized as a charity by the IRS or else your contribution may not be tax-deductible. There are plenty of organizations which have a good cause, but a good cause does not mean the organization is eligible to receive tax-deductible contributions. You can check the status of an organization by visiting the IRS website.

Your place of worship – The list of eligible organizations provided by the IRS may not include churches, mosques, temples or synagogues even though they are eligible to receive charitable contributions.

Ask for a receipt – Be sure to get a receipt for your charitable contribution, particularly if you make a donation of $250 or more. If the amount of your donation is less than $250, the IRS still expects you to have proof by way of a bank record or a written correspondence from the charity providing the terms of your gift. Make an itemized list for your records if you are making non-cash contributions.

Standard or itemized deductions - If you elect the standard deduction when filing your income tax return, you will not be able to claim a deduction for charitable contributions. The contribution will only be applicable if you itemize your deductions.

Happy Giving!
Disclaimer: These tips are not all-inclusive or to be considered as professional tax or legal advice. For detailed advice to fit your personal circumstances or preferences, seek professional counsel.