Tick tock, the donation clock for getting a 2016 tax deduction chimes at midnight on December 31st. The remaining days of the year are usually one of the busiest for charitable gifts. So here are some tax tips to keep in mind to help you ensure your donation is deductible. If you need assistance beyond the advice provided below, see your accountant, attorney and/or review the latest version of IRS Publication 526 which discusses how to claim a deduction for charitable contributions.
Verify charitable tax-exempt status.
Look up the organization’s name on the IRS search engine to verify it is eligible to receive contributions deductible as charitable gifts. Generally, these are organizations tax exempt under section 501(c)(3) of the Internal Revenue Code. You need to know the exact full name of the charity to conduct a proper search on this IRS page. Keep in mind that if the organization is a church or other house of worship, you may not find them on this list since such groups are not required to apply for tax-exempt charity status.
Donating by December 31st.
If you mail a check using the U.S. Postal Service, you can usually go by the delivered when mailed rule. However, this same rule may not apply when using another mailing service. If you are contributing online, as long as the transaction is posted before midnight on December 31st, it can count as a 2016 donation for tax purposes.
If you are taking a deduction for goods you donated to charity in 2016, keep in mind the goods should be in good used condition. If the item is unsalable, like a torn sweatshirt, it is not deductible. Also, it is up to you, not the charity, to accurately assign the proper fair-market-value to the donated goods. If the items are used, their value is what they would normally sell for in a charity thrift store in their current condition. If your in-kind gifts total $500 or more, you will need to complete and attach IRS Form 8283 to your 2016 Tax Return. If your claimed value of an item donated is greater than $5,000, you will need an outside appraisal (for more details see IRS Publication 561 on donating the value of donated property.)
Donating your car.
In addition to the Car Donation Tips provided on another page the Give.org website, check out the IRS Publication on Vehicle Donations. Depending on the claimed value of your car donation, you may need to get a written acknowledgement from the charity that includes certain information specified in the mentioned IRS publication. Keep in mind that if the charity sells your used car, your deduction is generally limited to the gross proceeds the charity receives from the sale, which may be significantly less than the current fair-market sales value of the car.
Of course, we also encourage you to find out if the charity you choose to support meets the 20 BBB Standards for Charity Accountability by viewing available reports on Give.org
On a separate note, as part of our Building Trust Video Series we are pleased to provide a video that features James Firman, President & CEO, National Council on Aging (a BBB Accredited Charity) which helps people aged 60 and older meet the challenges of aging, particularly in relation to health and economic security issues. Programs include but are not limited to job and volunteer placement, counseling, educational workshops, and chronic disease management programs.
We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving.
Finally, remember to let us know by going to https://www.give.org/ask-us-about-a-charity1/ if you are interested in seeing a report on a charity not on the list and we will do our best to produce one.
H. Art Taylor, President & CEO
BBB Wise Giving Alliance