Tax Tips
Tax Tip No. 14: Get a Receipt for Generosity
New charitable contribution rules require proof of every cash donation.
By Mary Beth Franklin, Senior Editor, Kiplinger's Personal Finance
December 20, 2007
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The holiday season tends to bring out the generosity in most people, but don’t expect to deduct those impromptu cash contributions to sidewalk Santas this year unless you have a receipt. A new rule requires that you have a bank record, such as a cancelled check or a written acknowledgment from a charity to back up any charitable contributions. In the past, you needed a receipt only for gifts of $250 or more.
What about those donations to a Salvation Army bell ringer? George Hood, the national community relations secretary for the Salvation Army, says bell ringers won’t be passing out receipts. If you drop a check in the bucket, however, you will get an acknowledgment in the mail. And if you donate using the "electronic kettle" at www.salvationarmyusa.org, you’ll be e-mailed an e-receipt.
Remember, to claim a charitable deduction, you must itemize and you make your contributions by December 31.
When you’re cleaning out your closets in search of year-end donations, keep in mind that used clothing and household items now must be in good condition to qualify for a deduction. Single items valued at $500 or more, regardless of condition, require a written appraisal. In most cases, tax deductions for donated cars, trucks and boats are limited to the amount the charity receives from the sale of the vehicle and requires a written acknowledgement from the charity.
When you transfer your car's title to the charity, make a copy of the title transfer and notify the state motor vehicle administration. In some states, however, there are exceptions to this titling process. Before donating the car, you should remove the license plates, unless state law requires otherwise.
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