Things You'll Need:
- IRS 1040-A tax form Receipts Gift appraisals
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Step 1
Keep records of your donations to charitable organizations; keep them in a file with other items you will use to document your federal tax liability. If part of your goal is to receive a tax deduction in exchange for your gift, before making it, verify that the charitable organization already has been designated a tax-exempt 501(c)(3) organization by the Internal Revenue Service. Ask to see a copy of the charity's tax-exempt letter. If your deduction is for expenses you incurred as a volunteer for an organization, keep your receipts and note what they were used for; if you drove your own car, keep a mileage log. You are entitled to deduct 14 cents per mile. Check with the Internal Revenue Service or with your accountant about whether your mileage can be figured at a higher rate due to special arrangements, like for disaster relief.
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Step 2
Make sure the charitable organization sends you an itemized receipt for each donation. If your donations to charity total more than $250, the receipt must indicate whether any quid pro quo was involved. In other words, if you gave the charity $2,000 for dinner tickets as part of a fund-raiser, and the dinner itself had a value of $50, your deductible gift for tax purposes is worth $1,950. The charity is required by law to send you a receipt for any donations of $250 or more.
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Step 3
Obtain a professional appraisal for any item you plan to donate to charity if it has a value of more than $5,000. The appraisal is the donor's legal responsibility. Without this proof, in the event that you are audited by the Internal Revenue Service, you may be denied the right to claim this gift as a deduction. If your gift was a vehicle, no matter what its actual value, your deduction is limited to the actual amount the charity realized from its sale--unless the charity uses the vehicle for transportation or, in turn, makes it available to a needy beneficiary as part of their program of services. You are then allowed to deduct the blue-book value of the car.
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Step 4
Check with the Internal Revenue Service about which lines of the 1040-A tax return form should be used to record your charitable deductions. They can also tell you how large a percentage of your income can be offset by charitable donations. It ranges between 20 and 30 percent depending on the type of gift.
