Remember Donations May Cut Tax Bills

As tax filing season approaches, the Internal Revenue Service reminds taxpayers who give money or goods to a charity by Dec. 31, 2016, that they may be able to claim a deduction on their 2016 federal income tax return and reduce their taxes.

Only donations to eligible organizations are tax-deductible. IRS Select Check on IRS.gov is a searchable online tool that lists most eligible charitable organizations. Churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations even if they are not listed in this database.

Claiming Charitable Donations
Only taxpayers who itemize using Form 1040 Schedule A can claim deductions for charitable contributions.

Monetary Donations
A bank record or a written statement from the charity is needed to prove the amount of any donation of money.

Donating Property
For donations of clothing and other household items the deduction amount is normally limited to the item’s fair market value.

Benefit in Return.
Donors who get something in return for their donation may have to reduce their deduction.

Older IRA Owners Have a Different Way to Give
IRA owners, age 70½ or older, can transfer up to $100,000 per year to an eligible charity tax-free.

Good Records
The type of records a taxpayer needs to keep depends on the amount and type of the donation.

Courtesy of IRS.

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Charitable donations and taxes

There are a lot of good reasons to make donations to charity, but most boil down to one simple fact: Giving feels good. It’s no surprise, then, that many Americans give money or property to organizations they care about. In fact, some give quite a bit.

Whether you’re a minor donor or a philanthropist, you probably give because you want to help. Still, taking maximum advantage of tax breaks for your charitable efforts can make a difference to your bottom line—and involves following some fairly straightforward rules for deducting your donations:

Itemize deductions. To claim charitable donations on your tax return, you need to itemize deductions on Schedule A. Before making this move, be sure that itemizing will reduce your tax bill more than taking the standard deduction

Keep proof of your gift. If you gave cash, hold on to a bank statement, cancelled check or credit-card receipt showing the amount of the donation. For gifts of cash or property worth more than $250, also keep the written acknowledgement from the charity showing the date and value of the donation.

Clothing or household items must be in good shape. Second-hand clothes and the like must be in at least “good used condition.” You can deduct only the value they would sell for in a thrift shop—not what you paid for them.

Fill out form 8382 when you deduct gifts of items worth more than $500.

Get an independent appraisal when giving valuable property. When you claim a donation of furniture, jewelry or other item worth more than $5,000, the IRS wants independent verification of its value.

Courtesy of TruboTax

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Tips for Charity Travel

Do you plan to donate your time to charity this summer? If you travel for it, you may be able to lower your taxes. Here are some tax tips that you should know about deducting charity-related travel expenses:
Qualified Charities.  To deduct your costs, you must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified
Out-of-Pocket Expenses.  You may be able to deduct some of your costs including travel. They must be necessary while you are away from home.
Genuine and Substantial Duty.  Your charity work has to be real and substantial throughout the trip.
Value of Time or Service.  You can’t deduct the value of your time or services that you give to charity.
Travel You Can Deduct.  The types of expenses that you may be able to deduct include: Air, rail and bus transportation,  Car expenses, Lodging costs, Cost of meals, and Taxi or other transportation costs between the airport or station and your hotel.
Travel You Can’t Deduct.  Some types of travel do not qualify for a tax deduction. For example, you can’t deduct your costs if a significant part of the trip involves recreation or  vacation.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999