Always dependent on the kindness of strangers, charities are
particularly hard hit in today's tough economy because many donors
are tightening their belts.
If you are able to open your heart and wallet this year, be sure
you make the most of your gift by getting a receipt for every
donation. And remember, to claim a charitable contribution on your
2010 tax return, you must itemize your deductions, and you must
make your contributions by December 31. If you pledged $500 in
September but paid the charity only $200 by December 31, for
example, your 2010 deduction would be $200.
If you donate cash, regardless of the amount, you'll need a
paper record -- a bank record, such as a canceled check, a
credit-card statement or a payroll check stub -- or a written
receipt from the charity. For donations of $250 or more, you have
to get a written acknowledgment from the charity containing the
date, amount of donation and donor's name. The law is clear: No
paperwork, no deduction.
If your contributions entitled you to receive merchandise or
services in return, such as admission to a charity event, you can
deduct only the amount by which your gift exceeds the fair market
value of the benefit received. When you're cleaning out your
closets in search of year-end donations, keep in mind that used
clothing and household items must be in good condition to qualify
for a deduction. To deduct contributions valued at $500 or more,
you must complete Form 8283 and attach it to your tax return that
you'll file next spring. Single items valued at $5,000 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; the charity is supposed to send you a form showing the
amount. In most cases, that's far less than the Blue Book value,
which was the standard benchmark that most taxpayers used in the
past to estimate the value of their donation -- that is, until
Congress decided a few years ago that too many clunkers were being
claimed as if they were cream puffs. There is an exception that
allows you to deduct the estimated value of the vehicle: If the
organization regularly uses the vehicle to perform charitable
activities, such as delivering meals, or if it gives or sells it to
someone in need for substantially less than it is worth, you can
deduct the car's fair market value.