8 steps to Michigan charitable donations even the IRS will love.
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Looking to cut your 2011 or 2012 Federal taxes by donating to charity? Follow these 8 Important Steps, whether you’re thinking about charity car donations, charity auctions or just writing a check.
It's a win-win situation - you cut your tax bill, and a charity gets the money they need to help people in your community. The Federal Tax Code changes yearly, but in the 2011 tax year the IRS continues to allow you to write off contributions to charity...as long as you make them to an IRS approved organization, and you itemize your deductions when you file. Below are 8 important guidelines to use to be sure your donation is deductible, whether you donate money or are looking for vehicle donation receipts for donating an automobile, truck, boat or even a golf cart.
1: Make sure you see the 501 (c)(3).
If you don't want the IRS to disallow your deduction, make sure you make your contribution to a qualified charity. The safest bet is to make your donation to a 501 (c)(3) organization, like Volunteers of America Michigan. It has to be a charitable organization - you can't deduct contributions to individuals, political organizations or people running for office. If you want more information about finding the right organization to give a tax-deductible contribution to, go to the IRS website and download Publication 526. Whether you give cash or property like car donations, charity organizations with a 501(c)(3) are the surest bet if you’re looking for a tax write-off.
2: You can't get a tax deduction if you don't itemize. Keep your canceled checks and vehicle donation receipts.
That's the beginning and end of it. If you want a tax write off you have to file Form 1040 and itemize your deductions on Schedule A. And to itemize you need receipts – canceled checks, cash donation receipts and vehicle donation receipts.
3: If you get anything in return, you better put it on your return.
If the charity you contribute to gives you anything in return for your contribution, like the free vacation vouchers some charity car donation organizations offer, you need to subtract its value from the amount you donated. The amount left over is the amount you can deduct. This goes for any goods or services you get in exchange for your donation - tickets, vacation vouchers, gift cards or any merchandise. Do the math. It's not worth the risk.
4: How much you can deduct depends on what you donate.
When you donate stock or other non-cash property, you can usually deduct them at fair market value. Clothes or household items that are used ordinarily have to be in good condition if you want to deduct their value. When you donate a car, truck or other vehicle to charity, reputable charities like Volunteers of America Michigan will make sure you get the vehicle donation receipts you need for your tax deduction.
5: Get to know the fair market value.
Most of the time fair market value is the amount that someone who wants to buy property, a vehicle or an item would pay someone who is selling it, when both of them have no pressure to buy or sell and all of the facts of the property, item or vehicle are known.
6: It won't play without a record.
If the charitable contribution you want to deduct from your taxes is cash, check or another kind of monetary gift, you have to have an acceptable record of it. Acceptable records include bank records, payroll deduction records or a written receipt from the charity with the charity's name, along with the date and amount of your contribution. If you make a donation to a charity via a text message, your phone bill can be proof if it shows the name of the charity you contributed to, along with the date and amount.
7: The other side of records.
You need the same kind of records outlined above if you make a contribution of cash or property to a charity that is worth $250 or more. Whether you make a monetary donation or car donations, charity organizations will provide some proof of your generosity. You have to show a bank statement or record, payroll deduction slips, vehicle donation receipts, or a printed receipt outlining the worth of your monetary contribution, or a detailed description of the property you contributed. The receipt or records need to show whether the charity gave you any services or goods in exchange for your donation. According to the IRS, you can often use the same documentation to outline the written description of monetary gifts and the acknowledgement the IRS requires for gifts of $250 or more. If your total non-cash deduction for the year is over $500 you will need to fill out IRS Form 8283 and attach it to your tax return.
8. A final note for those with extreme generosity.
If you contribute property or items with a value of $5000 or higher you will need to complete Section B of Form 8283. Completing Section B usually means you have to get a professional appraisal.
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Volunteers of America Michigan is an official IRS recognized 501(c)(3) charity
Feel good about cutting your taxes!
You get the maximum tax deduction and help Volunteers of America Michigan fund locally based programs that aid tens of thousands of people all over the Wolverine State. 100% of the money raised from car, truck and boat donations stays here in Michigan, funding community programs that bring hope to kids, homeless vets and neglected seniors.
To donate a car to Volunteers of America Michigan, just use the form on the right side of this page. Or call us toll free at 877-721-4862.
No matter where you live in Michigan, from Detroit to Marquette, Ann Arbor, Flint, Lansing, Saginaw, Bay City or Grand Rapids, your donated vehicle helps us fund programs that change the lives of tens of thousands of people in Michigan every year.