Don't Leave Money On The Table!

Have you recently donated money or items to a local charity in order to help someone less fortunate than yourself? Don't leave money on the table when you can take a tax deduction for such activity. Just make sure you have the required documentation in order to back up the deduction on your return. The IRS has become more strict on this since January of 2007 due to the Pension Protection Act of 2006 so make sure you understand the guidelines and follow the rules. This will save you a lot of time and money by taking deductions the right way.

In order to deduct a donation to a charity you must have a bank record or a written communication from the charity showing the name of the charity, the amount given and the date of the contribution. Acceptable bank records can be cancelled checks or bank statements containing the name of the charity, the amount given and the date of the contribution. Bank registers, diaries and personal notes made around the time of the contribution are no longer acceptable. Here are some additional tips to keep in mind when filing for a deduction on your tax returns:

• Contributions must be made to a qualified organization.
  
• Used clothing and household items must be donated in good used condition.


• Vehicle donations are subject to special rules.


• To deduct charitable items which have a value more than $250, you must have a written acknowledgement from the qualified organization.


• To deduct charitable items which have a value more than $500, you must complete a form 8283, Non-cash Charitable Deductions, and attach the form to your return.

If you need further information or help a good resource is IRS publication 526. As always, make sure you take advantage of the tax credits you are entitled to but make sure you follow the proper procedures. If you don't you can leave yourself open to filing an improper return and fall subject to penalties and interest. If this happens you can always obtain the services of a professional tax resolution company to rectify the situation. However, if you follow the rules on the initial return this will help you to avoid an unpleasant situation all together.