Question: I've been fortunate enough to make some charitable donations in 2011. Can you discuss what I need to consider for my taxes?

A BuyandHolder

Answer:

Dear BuyandHolder,

Charitable Donations & Tax Deductions

If you made charitable donations during 2011, read on. You’ll need the following information to avoid an audit and to deduct as much as the IRS allows. Caution: Do not inflate the value of your donations; the IRS scrutinizes claims very carefully.

To prove that your donation is legitimate, you must show a canceled check, a credit card statement, a bank statement or a written statement from the charity on its letterhead.

If your monetary donation is $250 or more, you must prove to the IRS that you did not receive something for it in return. This requires a detailed and dated receipt from the charity.

Condition…

The donated items must be in good condition to qualify for a deduction – with one exception. If a single item is worth more than $500 you can claim a deduction, regardless of the condition, as long as you submit a qualified appraisal with your tax return.

$TIP: It’s a good idea to submit an itemized receipt from the charity for all gifts – including those worth less than $500 – to substantiate your claim in case of an audit. 

Other points to keep in mind…

• You must itemize in order to take a charitable deduction and your total deductions should be greater than the standard deduction. If they are not, then go with the standard deduction. 

  The standard deduction depends upon how you file. In most cases, the amounts below apply; however if you are 65 or older and/or if you are blind, you are entitled to a higher deduction.

  Single: $5,800
  Head of household: $8,500
  Married filing joint: $11,600
  Married filing separate: $5,800
  Widow/widower: $11,600
  Dependent: $950-$5,800

• You must donate to a qualified organization. Not all non-profits qualify, so check the list at: www.charitynavigator.org. Note: This website’s Q&A section is very helpful. Take time to read it.
  
  
• Your donation must be paid by or mailed by December 31.
  
  
• In order to accurately note how valuable your clothing, household and other contributions are, including those made to thrift shops, the Salvation Army, Goodwill and the like, check with www.CharityDeductions.com.

It uses eBay data to estimate the value of donated items and offers three additional aids. One, it provides adjustments for the condition of donated items, dividing valuations into different five categories. Two, it keeps a running tally of all your donations. Three, it prints out a detailed list backing up the values and a summary report to give to an accountant or to use when completing IRS Form 8283.

Note: The huge e.Bay data base has values not only for clothing and household goods but for almost anything sold on eBay. Charity Deductions can also track money donations and any qualified mileage accrued while doing charity work.

Before signing on, check the fee structure for the service.

For Further Information, visit: www.irs.gov. Type “standard deduction” and/or “charitable donations” in the search box.

STAY TUNED: Next week, Donating a car.