Taxpayers often overlook and underreport charitable contributions on their tax returns. Here’s what you can do to maximize your deduction:
Research the charity. Make sure the charity you donate to is a qualified charitable organization. The IRS has a list available on its website, and the charitable organization should also confirm that your gift is tax-deductible.
Don’t donate cash. It’s much harder to document cash contributions. Go with a check or use a credit card, which provide better records.
Be careful about donating your vehicle. Make sure the organization you donate your vehicle to either uses the vehicle, or is in the business of using your vehicle to train others. If you donate your vehicle to a group that simply resells it, your donation is limited to what they receive for it — not the fair market value, which is usually higher.
Keep track of your noncash donations. Keep a list that documents each donation and include the quality of the item. And take photos of the goods.
Keep receipts and acknowledgements. If you have a receipt and donation acknowledgement from the charitable organization you have the basic requirements to defend your deduction.
Consider donating appreciated stock. If done correctly, you can use the appreciated value of a stock as a donation deduction without paying taxes on the gain.
Give us a call if you have questions about your charitable gift deduction.