’Tis the Season: Tax-Deductible Documentation Gives Back to Your Donors
If you’re among the many nonprofits receiving gifts from donors throughout the year, you’ll need to know these rules from the IRS.
Many charitable donations qualify for a tax deduction for taxpayers who itemize (vs. taking the standard deduction) on their 1040. Be sure to follow and communicate the IRS rules so your donors enjoy the tax benefit of their gifts:
- Only gifts to qualified charities are deductible. This category includes churches, synagogues, temples, mosques and government agencies, as well as other government-registered charities. If you’re unsure whether or not the IRS approves your nonprofit organization, use the Exempt Organization Select Check tool to find out.
- Monetary gifts must be supported by a bank record (such as a canceled check, which shows the name of the organization and the date and amount of a gift) or a written statement from your nonprofit. Gifts made by payroll deduction qualify if they’re supported by a pay stub, W-2 or letter from a donor’s employer indicating the charity and amount given.
- In addition, if a donor’s monetary gift is $250 or more, provide an official acknowledgment to them, indicating whether the donor received any goods or benefit from their gift.
- Non-cash household goods valued at $500 or less qualify only if the condition is good or better. If valued at $500 or more, donors must provide a qualified appraisal with their return.
- If you’re receiving a large item—such as a car, boat, or airplane—special rules apply for when and how much deduction the item’s donor can take.
- A donor’s year-end gift is deductible in the year it’s given. If donors use credit cards for their donations in late December but don’t pay the credit card bills until January, the donations count the day they made them –not when the bill is paid. This rule is also true if donors mail checks postmarked in December but not cashed until January—they can claim it for a 2014 donation.
Many nonprofit entities depend on donor support during this season of giving—be sure your donors know the rules so they gain their respective benefits as well.
If you need help communicating these tips with your donors or answering other tax or financial planning questions, get in touch! Contact the OSA&C team at Lynn@OnlineStewardship.com or 904-398-4747.
December 2014
