Year-End Gifting to Charities

Charitable Gift Planning

The spirit of the holiday season is a generous one. According to the National Center for Charitable Statistics, “The last few months of the year make up what is commonly called the Giving Season for the nonprofit community.” A 2012 report shows that non-profits receive most of their donations between October and December every year. If you are gifting to charities before the end of the year, we offer a few reminders about tax legislation changes that may affect your charitable giving plans.

  1. Check your state’s gift deduction limits. For example, in 2013 North Carolina passed House Bill 998 into law. This piece of legislation includes a cap of $20,000 on itemized deductions. (The standard deduction method provides a cap of $15,000 for married filers, and $7,500 for single filers.) Law changes like this may affect how a donor times their contributions.
  2. Vehicle donations. Several years ago the Internal Revenue Service clarified tax rules for vehicle donations. Donors may only claim the fair market value of the donated vehicle if the charity donates or sells the vehicle to a person in need for significantly less than market value, the charity makes major repairs to increase the value of the vehicle, or the charity receives a significant use of the vehicle for charitable purposes. Updated tax forms for vehicle donations can be found here.
  3. Written records. Although the changes were made seven years ago, donors may not be aware that the IRS updated requirements for charitable contributions. One critical rule: “A donor may not claim a deduction for any contribution of cash, a check, or other monetary gift made on or after Jan. 1, 2007, unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.”
Before making any significant charitable gifts, review options with a tax attorney. Charitable Remainder Trusts, tools that allow donors to receive trust income and an income tax deduction for the gift to the trust, may be advantageous for some charitable gift plans. A tax attorney can also help ensure you take advantage of every possible deduction. In this earlier post we reviewed a few ways to maximize year-end tax deductions for gifts.
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