The Ins and Outs of Charitable Donations

With spring cleaning in full force, you probably have piles of stuff that's ready to be dropped off at the nearest Goodwill. So -- let's discuss charitable donations.

By definition, a charitable donation is a gift made by an individual or an organization to a nonprofit organization, charity or private foundation. Charitable donations are most commonly in the form of cash, but can also be motor vehicles, clothing and other assets (AKA, your old "stuff").

If you've donated to Goodwill before, you've probably been asked if you need a receipt. And -- if you're like us, you might've been busy, in the midst of a million other errands -- so you politely declined and hurried on your way.

A donation receipt usually includes things such as:

the date of the donation
the organization's name
specific information on the items donated
the value of the donation

This receipt is very important, because it serves as proof to the Internal Revenue Service (IRS). And charitable donations are tax deductible -- meaning they reduce your taxable income -- as long as they're made to a nonprofit with 501(c) status. You can verify this by asking the organization, or searching the IRS' online database.

As a general rule of thumb, any donation valued above $250 requires a receipt in order to claim it on your taxes. If your donation exceeds $500, you'll need a receipt and a form for claiming it. So, for example, if you donate your old car, you'll need a receipt and a form from the IRS. A complete list of forms can be found on the IRS website.

The takeaway here? Save those receipts! Come tax time, those donations can add up!

Source: http://www.irs.gov/

Photo credits: Chris Potter, TruckPR.