Thursday, January 29, 2009

Gifts to Charity New Rules...

Don't forget...

New rules require more diligent recordkeeping; Keeping the receipts from your charitable contributions just became more of a priority. Starting January 2007, you will not be allowed to deduct charitable contributions of any amount unless you have the proof. What does this mean for you? Starting in 2007, each cash contribution you make must be substantiated with a bank record, receipt, letter, or other written communication from the donee organization that states the name of the donee, the date the contribution was made, and the amount of the contribution. Without this substantiation, you will not be allowed to deduct the contribution on your tax return.

Cleaning Out Your Closets? Items you donate may not qualify for a deduction under new rules. It used to be that you could take all your unused clothing and household items to the local Goodwill, Salvation Army, or thrift store and reap a nice charitable contribution deduction. All you needed was a receipt stating the fair market value and the deduction was allowed. The rules have changed for any donation of non-cash items to charitable organizations after August 17, 2006. A charitable contribution deduction of clothing or household items will only be allowed if the item is in "good" used condition, or better, and you have a receipt. The IRS is to issue guideline defining "good condition." A good rule of thumb may be to write "good condition" next to every donated item on your list. The IRS can deny a deduction for any item that has little monetary value. There is an exception for single items that have a value of more than $500 and for which you have a qualified appraisal.

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