Charitable Donations

(#22) How do you make sure that you get that charitable donation? Please call Jeffrey Brooks CPA at 602-292-2009 for questions or comments.

First, charitable donations are not as valuable as advertising for your small business! Why?
Advertising reduces your adjusted gross income on your personal tax returns (assuming you do not own a regular corporation) which allows you to take more deductions. Also, advertising is less likely to be audited by the IRS than charity (IRS calls these audits “Schedule A audits”).

So how do you make sure that you advertise?
Tell your charity that you want to help. You would be happy to help by posting an ad to their monthly news letter. I have a picture of my dog and me which personalizes my caring for animals.

So when you have a business and want to help a charity, make sure to advertise.

What should you do to make sure that you get those charitable donations?
Make sure that you do NOT lose charitable receipts. When you receive your mail and you receive a “thank you very much for the charity”..file the paper in a file folder or scan to a file called “Charity”.

Did you know that a cancelled check or an entry on your credit card statement is not sufficient for the IRS?

Second, did you know that it is better to get an Arizona Tax Credit than a plain tax deduction?

You have to be careful! Political donations are not deductible!

To deduct cash, check or other charitable gifts, keep bank records or written communication from the charity showing

• The charities name.
• The amount of the donation
• Date of the donation

If you want to know more..than go to website where it says:

Rules for Clothing and Household Items
To be deductible, clothing and household items donated to charity must be in good used condition or better. However, a taxpayer may claim a deduction of more than $500 for any single item, regardless of its condition, if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances, and linens.

Guidelines for Monetary Donations
To deduct any charitable donation of money, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. A bank record includes canceled checks, bank or credit union statements and credit card statements. Bank or credit union statements should show the name of the charity and the date and amount paid. Credit card statements should show the name of the charity and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card, and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

Prior law allowed taxpayers to back up their donations of money with personal bank registers, diaries or notes made around the time of the donation. Those types of records are no longer sufficient.

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009