November 27, 2019
From Jennifer Fields CPA
Fortis Family Office Tax Team
Making the Most of Giving Tuesday
Giving Tuesday was created to encourage charitable donations and giving. Started in 2012, Giving Tuesday takes place on the Tuesday after Thanksgiving to kick off the holiday and end-of-year giving season. This year it falls on December 3.
Charitable giving may be tax deductible for individuals and businesses, another benefit to giving back to the community. Here is some helpful information about making charitable donations, whether you’re donating on Giving Tuesday or at any other time of the year.
First, Make sure it’s an IRS-qualified charitable organization. Qualifying charitable organizations are nonprofit, generally with a 501(c)(3) filing status. These include religious, charitable, educational, literary, or scientific purpose groups or groups dedicated to the prevention of cruelty to animals or children, and others. If you’re unsure if your charity is a qualified nonprofit, check the database on the IRS website.
Make sure to get a receipt or other written record for cash, checks, or other monetary gifts. For monetary contributions over $250, you need this record and information about anything you received in exchange for the contribution.
Don’t forget that donations other than cash can also be tax-deductible. These include vehicles, property, stock, clothing, and household items. The amount you can deduct is determined by their fair market value. If you are donating your time, you can deduct any out-of-pocket expenses you incur as you’re volunteering. For businesses, event sponsorships and inventory or service donations count too.
There are limits to the amount that qualify for a charitable tax deduction, depending on the type of charity. With some you can give 60 percent or less of your adjusted gross income. There may be a limit to how much you can donate if your income is more than a certain amount. To see the specific limitations to tax-deductible contributions, see IRS Publication 526.
Finally, remember to claim the deduction on your taxes. In order to deduct a charitable donation, you must file Form 1040 and itemize your contributions on Schedule A of Form 1040. For donations of items valued at more than $500, taxpayers must complete section B of tax form 8283 and may need to have the items appraised by a qualified appraiser to determine their value.
For more information on how to correctly deduct charitable contributions, see IRS Publication 526.