And with limited time left in the calendar year, there is still time to contribute to your favorite charity -especially if you want to claim it on your 2008 taxes.
Sara Parker, from Utah Central Credit Union points out some basic facts about charitable giving so that you can be sure your contribution counts.
An examination of IRS tax records revealed that Utahns gave $2.9 billion to charity or 5 percent of their adjusted gross income. Nationally, Americans give an average of 2.3 percent of their income. So this is a very giving state. (Statistics: 2006 – the most recent year that tax records are publicly available. Reported: September 6, 2009, Deseret News)
You probably know you can claim write-offs from contributions of cash and other items to charitable organizations like United Way and Goodwill, but you might not realize that not every contribution qualifies.
Here are a few things to keep in mind:
1. Try to avoid giving cash. It’s preferable to make contributions by check or credit card. Make your check payable to the charity, not to the individual collecting the donation. If you do give cash, make sure you get a receipt from the organization.
2. Keep records of your donations (receipts, canceled checks, and bank statements) so you can document your charitable giving at tax time.
3. Know exactly how your donation will be used. The more spent on overhead means less will be spent on charitable purposes.
4. Make sure the organization you’re giving to is a tax qualified charitable organization. Tax exempt simply means the organization does not have to pay taxes. “Tax deductible” means the donor can deduct contributions to the organization on his or her federal income tax return. Check out the organization with the local charity registration office — which in Utah is the Utah Division of Consumer Protection or with the BBB. The IRS maintains a master list of qualified organizations and is updated quarterly and can be found in many public libraries.
5. Itemize deductions. You won’t get a tax savings from charitable contributions unless you itemize deductions. And itemized deductions must be less than 50% of your adjusted gross income.
Your write-off for a car depends on how the donated vehicle is used by the charitable organization. If the organization sells it without using it significantly for charitable purposes or making material improvements, your deduction is generally limited to the amount of gross sales proceeds. If the vehicle is used for charitable purposes you can claim its fair market value.
For charitable donations of used clothes and household items, you get no deductions unless the stuff is in “good” condition or better. “Household items” include furniture and furnishings, electronics, appliances, linens, and the like. In other words, there are no more charitable write-offs for donated junk. Under an exception, you’re allowed a write-off for any single item, regardless of its condition, that is appraised at over $500.
For more information, you can visit any Utah Central Credit Union branch or office. You can find them online at www.utahcentral.com.