TAX TIPS


Prepare to Prove Your Generosity

Mary Beth Franklin

Any amount you claim as a charitable deduction on your 2008 tax return needs a paper trail.



You may have had the best intentions when you made a charitable donation in 2008, but don't expect the IRS to take your word for it. Be prepared to substantiate any amount you claim as a charitable deduction on your 2008 tax return.

First, you must itemize your deductions in order to write off a charitable donation. Then, you must have a receipt for every contribution you claim. It used to be that you only needed a receipt for donations of $250 or more. No more. Now it's no receipt, no deduction -- regardless of the amount. You need a canceled check or other bank record or a written acknowledgment from the charity noting the date and amount of your contribution. Payroll receipts or pledge cards for donations made through payroll deduction are also acceptable proof.

Gone, too, are the days when you could donate your old car to a local charity and claim a deduction for the fair market value. "There was a strong suspicion that people were greatly inflating the value of cars they donated to charity, claiming the top Blue Book price for clunkers that had to be towed away," says Mark Luscombe, principal federal tax analyst for CCH, a tax and accounting information service.

Since 2005, taxpayers who give a car valued at more than $500 to a charity have to meet stringent substantiation requirements. You must obtain a form from the charity that identifies you as the donor and listing your Social Security number and the vehicle identification number. If the charity sells the vehicle without using it or fixing it us -- which is the most common case -- you can only deduct the amount the charity received from the sale. Attach the statement that certifies the sales price to your tax return.

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You cans still claim a deduction for donating used clothing or household goods that are in "good condition or better". You should value your donations as they would be priced in a thrift store. Or, you can use a computer program such as "It's Deductible" that is included in TurboTax tax preparation software (which comes with advice from Kiplinger's). It estimates the value for of each donated item and figures the total deduction.

Although you can't deduct the time you devote to a charity, you can deduct the expenses you incurred while contributing your service to a qualified organization, such as driving your car to deliver meals to the home bound. For 2008, you can claim 14 cents per mile for auto expenses related to charitable works.

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