PARSIPPANY, N.J., Nov. 13, 2012 /PRNewswire/ -- When it comes to charitable giving, Americans are very generous. An estimated 117 million U.S. households gave to charities during 2011, according to Giving USA: The Annual Report on Philanthropy by the Giving USA Foundation and The Center on Philanthropy at Indiana University. On average, almost one quarter of charitable donations occur during the holiday season (also known as year-end giving). As we enter the 2012 holiday season, Jackson Hewitt Tax Service® reminds taxpayers that altruism can give back at tax time.
"While taxes may not be top of mind when it comes to charitable giving, the ability to receive a deduction on taxable income for their generosity is a unique privilege to American taxpayers," said Mark Steber, chief tax officer, Jackson Hewitt. "However, not all charitable contributions are equal under the tax code. To be tax deductible, charitable donations must be made to a qualified organization, and for the purpose of taxes, there is a big difference between giving money, goods and time."
Steber offers four helpful tips about claiming charitable contributions on an income tax return:
- What the IRS considers a charitable contribution – A charitable contribution is tax deductible if the donation or gift is made to a qualified organization. Taxpayers can visit www.irs.gov to view a list of qualified organizations. To be deductible, the donation must be voluntary and made without receiving anything of equal value in return. Charitable contributions can include money or property given to a qualified organization as well as certain out-of-pocket expenses accrued when serving as a volunteer.
Tax deductible contributions do not include the cost of raffle, bingo or lottery tickets, the value of donated time or services or the value of donated blood, even if given to a qualified organization.
- What documents are required to deduct a charitable contribution – Taxpayers are required to keep records and receipts for all charitable contributions regardless of the amount or value. A bank record or a receipt from the organization is required for all cash contributions, and a separate, written acknowledgement from the qualified organization is also required to claim the deduction for any single cash or property contribution of $250 or more.
- When charitable contributions can be deducted – Charitable contributions can generally only be deducted for the income year in which they are made. Contributions sent by mail are considered made on the date they are postmarked. Some contributions that are not able to be deducted in the current tax year (because of adjusted gross income limits) may be carried over to future years.
- How to deduct noncash charitable contributions – Clothing, toys, furniture or other household items donated to a qualified organization allow taxpayers to deduct the fair market value of the donated items. To qualify for the deduction, all items must be donated in good condition. The IRS does not provide a guide to determine fair market value; instead, taxpayers must survey thrift and consignment stores for similar items to provide an indication of fair market value. IRS Publication 561, Determining the Value of Donated Property, provides general IRS guidelines on noncash donations.
Generally, the deduction for property contributed is equal to the fair market value of the property at the time of the contribution. However, different rules may apply if the value of the property has increased or for vehicle donations.
"There are many rules and regulations surrounding tax deductions for charitable contributions," continued Steber. "A conversation with a trusted tax preparer, who is knowledgeable of the current tax codes, is the best way to maximize the deduction amount for charitable contributions made during the year."
Many Jackson Hewitt offices are open year round to assist taxpayers in identifying the best tax strategy for their individual situation and circumstances. To learn more about deducting charitable contributions, please visit www.JacksonHewitt.com or call 1-800-234-1040 to find a local Jackson Hewitt office.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an industry-leading provider of full service individual federal and state income tax preparation, with 6,800 franchised and company-owned locations throughout the United States, including 2,800 located in Walmart stores nationwide, and more than 400 Sears stores in the United States and Puerto Rico for the 2013 tax season. Jackson Hewitt Tax Service® also offers an online tax preparation product at www.JacksonHewittOnline.com. For more information, or to locate your neighborhood Jackson Hewitt® office, visit www.JacksonHewitt.com or call 1-800-234-1040. Jackson Hewitt can also be found on Facebook and Twitter.
SOURCE Jackson Hewitt Tax Service Inc.