Making a donation is not only a great marketing tool but it is also very easy. Unfortunately, claiming donations on your taxes is a lot more complicated.
Here is a checklist of things that need to be done before writing the check to a charity of your choice:
- In order to receive a tax benefit from your donation, it must be sent to a qualified charity. Usually, only 501 (c)(3) organizations are qualified.
- If you are still unsure if an organization is qualified or not, the IRS has a search tool so you can do some research on the desired organization.
- It is important to understand that not all donations are equal in value.
o Cash or check donations are deductible only with proof of the donation.
o Volunteered services are not deductible.
o Mileage incurring while volunteering is deductible as long as the traveling was for any other purpose.
o Donations of goods, services, or property are deductible.
- If the organization gives your business something in return for your donation, you must deduct its value from your gift.
- For any donation over $250 dollars you must obtain a letter from the organization stating the amount and whether you received any goods or services in exchange.
- Property is deductible up to its fair market value.