#GivingTuesday – Decrease Your Taxes by Donating Gifts and Cash
Washington, DC—(November 28, 2016) Sometimes in life, doing good and doing well can go hand-in-hand. #GivingTuesday, in its fifth year, is a global effort to encourage charity at a time of the year when many are feeling thankful. Following Black Friday and Cyber Monday, #GivingTuesday encourages charitable donations with the power of social media. But don’t just donate – deduct! By deducting your donations on your tax returns, you can make #GivingTuesday a win/win -- but it’s important to follow IRS’ guidelines.
- First, the organization to which you donate must be recognized by the IRS as tax-exempt. One way to be certain is by checking “EO Select Check” on the IRS website. This tool will search for your organization and let you know if IRS considers it eligible. You may also confirm an organization's status by calling the IRS at 1-877-829-5500, but using the Internet will probably save you wait time.
- You must itemize your taxes in order to claim the deduction – taking the standard deduction will not allow you to reduce your taxes by the value of your contributions.
- If you’ve given a financial gift with no goods or services exchanged, you need to be able to furnish a written statement from the charity. The statement must show the name of the charity, the date and the amount of the contribution. If you’ve given via payroll deductions, you must provide documentation from your employer, such as a pay stub or a Form W-2 wage statement.
- With the door-to-door service supplied by many charities including the Military Order of the Purple Heart and Big Brothers, Big Sisters of America, you can book a pick-up at your home through the Internet. Items must be in good condition and you must have a receipt from the organization. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return. Make sure to document and photograph all items donated.
- If you are purchasing items to benefit a charity, keep in mind that only the difference between the price you paid and the fair market value is deductible. If you charged your purchase or donation to a credit card during 2016, it will count for 2016 taxes – even if you don’t pay your credit card bill until 2017.
About Enrolled Agents
Enrolled agents (EAs) are America’s tax experts®. They are the only federally-licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. While attorneys and certified public accountants are also licensed, only enrolled agents specialize exclusively in taxation.