Five Tips for Effective and Enjoyable Charitable Giving

Charitable giving is always a win for the contributor and the organization. However, as easy as it may sound, giving can turn in to a nightmare really quickly if the organization is not legitimate or if a donation somehow gets lost. Here are several tips to insure that your charitable contribution results in a positive experience for everyone.

The first tip for a great charitable giving experience is to be sure that the charity chosen is a legitimate organization that is recognized by the IRS. A quick and easy way to check this is to visit the IRS website to view Publication 526 entitled "Charitable Contributions". Stay away from online-only charities, and especially solicitors. If a charity hasn't been decided upon, visit Charity Navigator to see statistics and ratings for over 5,400 American charities.

If your calling is more local or very specific and not recognized by Charity Navigator, you are generally allowed a 50% ceiling on your AGI (adjusted gross income) for contributions if they are any of the following: churches or other religious organizations, tax exempt educational or medical research organizations and certain private organizations, among others. A tax adviser will be able to answer questions about specific organizations.

Keep in mind that charitable contributions are only deductible if deductions are itemized on Form 1040, Schedule A. If filing your own return, be sure to keep all paperwork together, including receipts, IRS forms, canceled checks, and photos if necessary.

A charitable contribution isn't necessarily only monetary. A contribution can be in the form of an admission ticket to an event or new and used goods. Valuating goods can be tricky; visit the IRS website for clarification on what can be donated and what type of deduction can be taken. When it comes to admission to events, only the amount above the fair market value is legally deductible.

For any donation of $250 or more, a form of written documentation must accompany the deduction on the 1040. Charities should outline the total amount, if goods were included, and what the individual received, if anything, for their donation. Gifts of $500 or more by one taxpayer in one year require Form 8283 and other requirements are in place for total charitable deductions up to $5,000,000. Be sure to understand exactly what paperwork, if any, is required to claim a deduction on the 1040 to insure a smooth process when it comes time to file. It's hard to reach charitable giving limits; a good rule of thumb is not to worry unless your contributions are more than 20% of your total AGI.

www.charitynavigator.com
http://www.irs.gov/publications/p561/ar02.html