Equifax

Finance Blog

Strategies to Ensure You Get Credit for Your Charitable Deductions

Written by Eva Rosenberg on April 6, 2011 in Tax  |   1 comment

Strategies to Ensure You Get Credit for Your Charitable Deductions By Eva Rosenberg, EA In one of my EA Exam Review Course sessions, we learn about the Tax Court. I build a class around the Tax Court’s recent decisions. One such case was Daniel and…

Strategies to Ensure You Get Credit for Your Charitable Deductions
By Eva Rosenberg, EA

In one of my EA Exam Review Course sessions, we learn about the Tax Court. I build a class around the Tax Court’s recent decisions. One such case was Daniel and Ruth M. Gomez v. Commissioner of Internal Revenue.

This case is important to you because these people made real, honest-to-goodness tithing donations to their church of over $6,500—and lost the right to claim the deduction. Why? For the same reason many people lose their deductions—no documentation.

The Internal Revenue Code requires that you have substantiation for all of your deductions of $250 or more before you file your tax return—not during the audit.

Donations of Money

Here’s a simple three-step process to ensure your donations of money are deductible:

  1. Make all donations by check or credit card so you have a receipt.
  2. Get a receipt from each organization for each donation, however small.
  3. Be sure your receipt shows the value of any good, service, or meal you received—or that the receipt says something to the effect of “No benefit was provided to donor.”

Donations of Stuff

When you donate things, the rules are more complicated. You can get some hefty tax benefits, but there’s more work involved. You must do all three of these things:

  1. Prove what you donated.
  2. Prove that the items you donated were not junk.
  3. Prove the value of the goods you donated.

You can easily prove what you donated by taking photos or videos of the items. Having a visual record will help you in two ways: it will show the condition of the items you donated, and it will jog your memory so you can build a more accurate list of your donations.

Proving the value of routine things can be pretty easy. You have two free tools at your disposal: ItsDeductible, from Intuit, and DeductionPro, from H&R Block. These tools will give you values based on brand-name or generic clothing, appliances, electronics, etc. You can either print out the details or import the data directly into your tax return.

What about more valuable items? Anytime you want to make a donation of $5,000 or more for non-cash items, you will need a formal, written appraisal. This applies to artwork, furniture, equipment, real estate, businesses, and anything else that does not have an obvious, objective value. In addition to the written appraisal, the appraiser will have to sign page 2 of your Form 8283. Have the appraiser sign at least two copies in case you mess one up or you want an original for your files.

For donations of publicly traded stocks, the closing value on the stock market is an objective record. Print out the data to attach to your Form 8283. You can find historical data at MarketWatch’s Big Charts, or on Yahoo!

People who tithe or make large annual donations to their favorite religious institutions or charities can honor their obligations while avoiding capital gains taxes. It’s a little complicated—but it can cut your taxes.

Read More about Filing Your 2011 Taxes:

Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. Eva is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com.

1 comment

  1. D. B. Warr says:

    What about Pro bono work…. professional services provided to a nonprofit for free???


Leave a Comment


Name :


Commenting guidelines

We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.

Some other factors to consider when commenting:
  1. Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
  2. All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
  3. We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
  4. Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
  5. Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
  6. Stay on topic. Your comment should be concise and pertain to the specific post in question.
  7. Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
  8. Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.

Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.


Tax Archive

Stay Informed Sign up for our FREE Equifax email Newsletter