The greatest benefit of charitable giving is the knowledge that you’ve helped make a difference in the lives of others. At the same time, charitable giving can also provide potential tax breaks so long as you are aware of some rules and keep track of what you’ve donated.
You’re free to give as much to charity as you like. However, you’ll need to follow IRS rules and keep records of your gifts to claim tax deductions.
- If your contribution exceeds $250 in value, either in cash, certain property, or out-of- pocket expenses that are attributable to volunteer work, you will need to obtain a written description of your gift.
- To declare charitable gifts of non-cash items worth more than $500 (used clothing, furniture, etc.), you must supply cost and acquisition information for the items
- When claiming single non-cash gifts worth more than $5,000 (excluding publicly traded stock), you must include an appraisal of the gift’s value with your tax return.
Direct gifts to charity are just one of the ways you can combine helping a worthy cause with tax benefits. Other options include setting up charitable remainder or charitable lead trusts or setting up a private foundation. Complex rules govern the creation and maintenance of these vehicles. I can help you understand the rules and show you how a trust or foundation might fit in your financial plan.