One of the simplest ways to slice your individual tax bill at the end of the year is by giving a gift to a qualified charitable organization. Regardless of whether it is a donation of property or cash, you are able to claim a charitable deduction for your generosity as long as you meet certain requirements. It is a great last-minute tax planning strategy as you can literally donate on December 31 and you can still claim your deduction for 2015.
You can deduct the full amount of your charitable contribution of your tax return, up to the stated limit of 50% of your adjusted Gross Income. Gifts of property are limited to 30% of your AGI, and any excess can be carried over for up to 5 years. You can benefit in 2015 from a donation made in a prior year.

Monetary Donation: you can deduct the amount whether it was cash or a charge on a card.
When contributions of more than $75 are made where a benefit is received in exchange for a contribution, the charity is required to provide what is known as a good faith estimate of the goods or services received as well as the amount of payment exceeding the value of the benefit. The deductible amount is only the difference between the payment and the fair market value of the benefit received.
Property Donation: deductible amount will typically equate the property’s fair market value, or FMV, if you’ve owned it for longer than a year. If not, the deduction is simply limited to your cost of the property.

The tax law imposes very stringent rules on record keeping in this area. To deduct a charitable contribution of $250 or higher, you must receive an acknowledgement in writing from the charity stating the amount of the donation, as well as a description of any non-cash property that was contributed and the value of any goods or services that the taxpayer provided. These acknowledgements must be completed and obtained by the taxpayer before the tax return is filed or at the very least by the due date.
There are other rules applicable to charitable contributions of property as well. For example, it is a requirement that you provide additional tax return information for non-cash contributions that exceed $500. Furthermore, for property with a value exceeding $5,000, you need to obtain an independent appraisal of the property’s FMV. Fortunately, the cost of an appraisal is treated as a miscellaneous expense and is tax-deductible itself. It is also wise to note that for high-income individuals certain itemized deductions, including these write-offs for charitable donations, may be limited under certain IRS rules. The reduction in 2-15 starts at $258,250 for individual filers and $309,900 for joint filers.

This is one of the best last-minute tax deductions to keep in the back of your mind as the end of the year is rapidly approaching. You have until midnight on New Year’s Eve to make a contribution applicable to 2015; if it is made in 2015 it is good for your 2015 tax return!

We’ve helped thousands of individuals properly deduct qualified charitable contributions. Contact us to schedule an appointment for your 2016 taxes before sports fill up. 714-896-0366.