Holiday Donation Tax Tips from the IRS

The holiday season is a time when many residents and businesses make contributions to charities, so the Internal Revenue Service has provided some tips on how to do so.

According to the IRS, there are several tax law provisions that have taken effect in recent years of which residents who are thinking of making a donation should be aware.

One provision is a special tax-free charitable distribution for certain IRA owners, which is scheduled to expire at the end of the year. It allows owners of individual retirement arrangements over the age of 70 years to directly transfer tax-free up to $100,000 per year to an eligible charity.

The option can be used from distributions from IRAs, regardless of whether the owners itemize their deductions.

To qualify, the funds must be transferred directly by the IRA trustee to the charity. Distributed amounts may be excluded from the IRA owner’s income, resulting in lower taxable income.

In order to be tax-deductible, any clothing or household items donated to charity must be in good condition. A clothing or household item for which a taxpayer claims a deduction of more than $500 does not have to meet this standard if the taxpayer includes a qualified appraisal.

Donors must get a written acknowledgement from their charity for all gifts worth $250 or more that includes a description of the items contributed.

To deduct money donations, a taxpayer must have a bank record or written communication from the charity that includes the date and amount of the money donated. These include cash, check, electronic funds transfers, credit card payments and payroll deductions.

Also, donors should keep in mind that contributions are deductible in the year they are made. They should also check on the IRS’s website to make sure that they charity to which they are donating is eligible for tax deductions.