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What you need to know about charitable deductions

Even during times of economic uncertainty, millions of Americans are still generously giving both time and money to non profit and charitable organizations. Thanks to IRS deductions provided by Uncle Sam, charitable contributions can be win-win to both the giver and the recipient.

According to Michelle Musacchio, CPA and owner of Fit Money CPA in Louisville, "When you give to a qualified charity such as the Salvation Army, Humane Society, Goodwill, or your church, depending upon your taxing situation, you may be entitled to a charitable deduction on Schedule A of your individual income tax return."

Here are a few tips from Musachhio to help you qualify for the deduction:

Save the Receipt:

"All qualified charities are required to give you a Receipt for your donation, no matter what the dollar amount," Musacchio says. "You may not take a deduction for cash contributions unless you have this."

Household and Clothing items:
"You need a receipt for these items as well," Musacchio mentions. "But also, the items should be in good condition to be donated. Clothes should not be wholly and household items must be usable-not junk." Without a receipt, it might cause a red flag to the IRS.

What about my time?

While it's admirable to donate precious time to any organization, "you are unable to take a charitable deduction for your time or services rendered," she notes. "But you may take a charitable deduction for mileage driven for charitable purposes and out of pocket expenses." Once again, you must show record of these expenses through receipts and mileage logs.

Here are some other Tax Tips for 2009.




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