Thursday is not only the end of 2015, but also the last day for which people can make contributions to eligible charities if they want to deduct those donations from their taxes next spring.
According to the U.S. Internal Revenue Service, contributions to tax-deductible organizations count for the tax year in which they are made, so contributions must be made by or on Dec. 31. The rule counts for money as well as donations of clothing or household goods.
To deduct monetary contributions – whether cash, check, credit card – donors need to have a bank record, such as a canceled check or a bank or credit card statement, or a written receipt or statement from the charity showing the name of the organization as well as the date and amount of the donation. Payroll stubs or a Form W-2 tax form and a pledge card showing the name of the charity are needed for those who donate through deductions from their paychecks.
For people who donate used appliances, furniture, clothing and other household goods, donors need to get a written statement from a charity for any gifts worth $250 or more. The IRS warns that the items should be in good used condition or better; the exception is for any item for which a taxpayer claims a deduction of $500 or more and includes a qualified appraisal. Some charities actively promote the donation of old cars or boats; deductions for vehicles are generally limited to the amount for which the charity sells the vehicle, if it’s more than $500. The charity must provide the donor with an IRS Form 1098-C to be included with the donor’s tax return.
The IRS requires that a taxpayer get a statement from the charity for any gift of $250 or more, whether in money or goods.
There are a couple of other important things to remember about making charitable contributions for tax purposes:
▪ Donors need to make sure the organization to which they’re giving is tax deductible. In addition to religious organizations such as churches, synagogues, temples or mosques, government agencies are eligible to receive deductible donations. The IRS has an online search tool, Select Check, where people can look up eligible tax-exempt organizations.
▪ Only taxpayers who file taxes on the IRS Form 1040 “long form” and itemize their deductions on Schedule A form can deduct contributions to charities. People who claim only the standard deduction, or who use one of the IRS “short forms” – 1040A or 1040EZ – cannot claim charitable deductions.
▪ Last-minute donations by credit card count toward this tax year if they are made by Dec. 31, even if the credit card bill doesn’t come until after the first of the year. The IRS reports a donation made by check can be counted as deductible in 2015 if it’s mailed by or on Thursday, even though it won’t hit the bank until after Jan. 1.
The deadline for filing tax returns to the IRS next spring will be April 18, a three-day reprieve from the usual April 15 deadline because of a holiday in Washington, D.C. The IRS will open the tax season on Jan. 19, when it begins processing tax returns that are filed electronically.
More detailed information about charitable contributions and tax deductions is available on the IRS website.
Check that charity
People can look up tax-exempt charities that are eligible to receive tax-deductible contributions with the IRS’ Select Check tool online at https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.