Wednesday, January 09, 2013

Charitable Donation Record Keeping

In 2013, we expect to make a number of charitable donations.  Since we plan to itemize on our 2013 tax return, I'll be following the rules for documenting and claiming charitable deductions.  
  • Cash.  Receipts are required to be able to claim a deduction.  Valid receipts include cancelled checks, a credit card statement, or a document (letter, statement or receipt) from the charitable organization.  So if I want to deduct the money I put into a Salvation Army Kettle, I write a check.
  • Goods.  We make numerous contribution of used goods and clothing to our church, Goodwill, and other charitable organization.   Again, receipts are required to make a deduction.  If the number of items is large, we will make a list and attach it to the receipt.  If the number of items is small, we will just write it on the receipt.   Valuation of the goods are usually determined by the contributor.  We use "thrift store prices" as the benchmark, which Goodwill conveniently provides.
  • Appreciated goods. The only appreciated good we donate is publicly traded stock.   I use the closing share price on the date of the donation.  As with other contributions, a receipt is required.   
  • For this year, we won't be donating a vehicle or appreciated goods such as art or antiques.   These have special requirement for valuation, which I haven't researched since it won't be relevant for our tax situation.

    In 2013, we expect to have a very large charitable deduction donation. First, I will be donating many of the personal items that I inherited from my parents that have no sentimental value.  Second, we have been saving up contributions to do every other year to maximize the benefit of deductions over two years.  So good record keeping will be important, especially if our tax return is audited by the IRS.

    For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

    This is not financial, tax or charitable giving advice. Please consult a professional advisor.

    Copyright © 2013 Achievement Catalyst, LLC

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