Tracking Financial Donations, and Planning for 2014

Source: Flikr user  MoneyBlogNewz

Source: Flikr user MoneyBlogNewz

In 2013, you may have given a tax deductible gift of cash, donated appreciated stock, transferred ownership of a valuable possession, or given from other resources. Meanwhile, the parameters for IRS charitable deductions for 2014 are in question until the current Congress makes some decisions and acts. Something that can help with both of these is a good accounting system for your charitable gifts.

During these first few months of 2014, if you are like most people who itemize deductions, you are busy gathering financial data to prepare your personal tax filings. Do you have a good system for documenting all of your gift events, amounts, and recipients? If not, then you have an opportunity, while you are compiling the charitable gift information to use on your 2013 tax filings, to improve or start using a new accounting system. This should help you track your charitable giving more closely and will make your tax preparation easier next January.

The large tax-preparation software companies have all built some of this functionality into their software so, if you use one of those products, check out their charitable donation functionality to see if it will work for you. If not, talk to your tax preparer about it, or set up a system for yourself.

If you gave a gift of appreciated stock, or plan to, Roy Lewis has an article on the topic posted on The Motley Fool you can refer to. For other types on non-cash gifts over $250, you will probably need to contact the charitable organization about making the gift and get the appropriate documentation you need from them. For more on these instances, refer to IRS Publication 526. With cash gifts, there are a number of things you need to know to help you track donations and plan for this coming year:

IRS rules require nonprofits to send an official receipt for donations of more than $250. That paper trail makes it easier to account for those gift in filings with itemized deductions. If you make donations below $250, you will probably not get receipt letters for those donations. Yet you will still need to document them, and will be glad you did if you get audited.

For each charitable donation you make in any amount of money; in cash, check, charge, etc., the IRS requires you to have an official record of payment (not a commitment to make a charitable gift): a canceled check, credit card statement, or a receipt from the charity. This official record will need to show 1) the legal name of the organization, 2) the date of the contribution, and 3) the amount of the contribution. Whether you have a receipt or are documenting a smaller cash gift, your tracking system should show these three elements.

Be methodical – if you don’t have a system, some suggestions of how to keep track are included in my latest article on The Motley Fool.

Part of the issue of achievement is to be able to set realistic goals, but that’s one of the hardest things to do because you don’t always know exactly where you’re going, and you shouldn’t.

– George Lucas



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