The primary motive for charitable contributions is not based on tax benefits for Christians. But the tax benefits are a valid consideration as we try to be good stewards of all God has entrusted to us. This often means reviewing our contributions as we approach year end. Here are a few reminders:
1. Charitable contributions must be made to qualified organizations to be deductible.
2. Charitable contributions are deductible only if you itemize deductions for taxes. If using the standard deduction, they are not deductible.
3. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to some items like clothing, household items, cars and boats.
4. If you receive something in return, you can deduct only the amount that exceeds the fair market value of the benefit received.
5. The value of donated time or rent free use of a building is NOT tax deductible as a charitable contribution. This includes the value of time given by a professional.
6. Keep good records of any contribution you make, regardless of the amount. You must maintain a valid written record.
7. Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in May, but paid a charity only $200 by Dec. 31, you can only deduct $200.
The date postmarked or the date charged on a credit card determine the year of the deduction.
8. For any cash contribution of $250 or more, you need more than a bank record. You must have a written acknowledgment from the organization with the amount and whether the organization provided goods or services in exchange for the gift.
9. If you donated property, the acknowledgment must include a description of items given. For items valued at $500 or more you must include with your tax return Form 8283—Noncash Charitable Contributions.
10. You can be creative. If your ability to use itemized deductions is “borderline,” consider grouping larger charitable contributions in alternate years. Example: Make large contributions in January and December of one year and get the tax benefit of itemized deductions for that year. In the preceding and subsequent year, when contributions are lower, use the standard deduction.