Thinking about making donations to a charity or nonprofit before the end of the year? There are a few things to keep in mind in terms of eligible deductions and documentation you should have in the event of an audit.
The two special deductions from 2021 have expired. You may no longer claim up to $300 per individual/$600 per couple in cash donations in addition to the standard deduction. If you claim charitable donations for 2022, you must itemize your deductions.
Be sure that the organization is classified as tax-exempt. To verify a charity is a nonprofit, use the IRS Tax Exempt Organization Search tool.
Save documentation to validate your deduction. You can claim charitable contributions that are less than 60% of your AGI, and you must obtain a written letter of acknowledgement from the organization for any donations of cash or property valued at $250 or more. Consider donating noncash assets, such as stocks, to both avoid capital gains taxes and to take advantage of claiming the amount of the deduction at the fair market value on the date of the contribution.
Contact us to learn more about how Specialty Bookkeepers can provide tax services and help to minimize your tax season stress.