Ensure Your Donations Pass the IRS Test

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Ensure Your Donations Pass the IRS Test

Here's a handy checklist to make sure your donations comply with IRS rules

Charitable contributions may come to mind as you look for different ways to lower your 2023 tax bill before the end of the year, as donations are a great way to give to a deserving charity while giving back to you in the form of a tax deduction.

The IRS, however, can be quick to disallow charitable contributions without proper documentation. Here are 6 things you need to do to ensure your charitable donation will be tax deductible.

  1. Confirm eligibility of charity. Only donations to qualified charitable organizations registered with the IRS are tax-deductible. You can confirm an organization qualifies by calling the IRS at (877) 829-5500 or visit www.irs.gov and click on the charities and non-profits tab.

  2. Ensure you can itemize. You must itemize your deductions using Schedule A in order to take a deduction for a contribution. For 2023, you need to have at least $13,850 worth of deductions to itemize ($27,700 if married). If you're going to itemize your return to take advantage of charitable deductions, it also makes sense to look for other itemized deductions. These include state and local taxes, real estate taxes, home mortgage interest and eligible medical expenses over a certain threshold. If your deductions are not going to exceed these thresholds, delay your deductions until next year and bundle two or more years of contributions into one year.

  3. Get receipts. Get receipts for your deductible contributions. Receipts are not filed with your tax return but must be kept with your tax records. You must get the receipt at the time of the donation or the IRS may not allow the deduction.

  4. Pay attention to the calendar. Contributions are deductible in the year they are made. To be deductible in 2023, contributions must be made by Dec. 31st. Contributions made by credit card are deductible even if you don’t pay off the charge until the following year, as long as the contribution is reported on your credit card statement by Dec. 31. Similarly, contribution checks written before Dec. 31 are deductible in the year written, even if the check is not cashed until the following year.

  5. Be extra careful with noncash donations. You can make a contribution of clothing or other items around your home you no longer use. If you decide to make one of these noncash contributions, it's up to you to determine the value of the contribution. Many charities provide a donation value guide to help you determine the value of your contribution. Your donated items must be in good or better condition and you should receive a receipt from the charitable organization for your donations. If your noncash contributions are greater than $500, you must file Form 8283 to provide additional information to the IRS. For noncash donations greater than $5,000, you must also get an independent appraisal to certify the value of the items.

  6. Keep track of mileage. If you drive for charitable purposes, this mileage can be deducted on Schedule A. For example, miles driven to deliver meals to the elderly, to be a volunteer coach or to transport others to and from a charitable event, can be deducted at a rate of 14 cents per mile. A log of the mileage must be maintained to substantiate your charitable driving.

Remember, charitable giving can be a valuable tax deduction — but only if you take the right steps.