Brian Wynne, CPA

This week has gotten off to a heartbreaking start with the damage inflicted by the Oklahoma tornadoes.  The sheer scope of the devastation and loss is hard to imagine and many of us are eagerly looking for ways to help, no matter where we live.

As you consider a charitable donation to help those affected by the tornadoes, there are some tax considerations to keep in mind.  While the tax aspect is certainly not the most important factor – charitable giving is important regardless of tax benefits – it is helpful to know the rules if you are planning to claim the deduction.  It is also important to do your homework and make sure you avoid the inevitable charity scams that are (unfortunately) sure to come.

Here are some items to keep in mind:

You Can Only Deduct Donations to Qualified Charitable Organizations.  While many charities make their status clear on their website and other publications, if you are unsure, you can also use the EO Select Check, a search tool provided by the IRS, to determine an organization’s exemption status.

Donations Must be Itemized.  In order to claim a charitable deduction, your gifts must be itemized.  Cash/check donations and in-kind gifts are listed separately.  If you are giving in-kind, you can usually take a deduction for the fair market value of the items, but you’ll need to be specific not only about the items you donate, but also their condition.

You Need a Receipt.  The IRS requires a written acknowledgement from the charity to substantiate donations of $250 or more.  Receipts must be obtained at the time of donation and contain the following information – the date, a description of items donated or the amount of money, details identifying the recipient, and a statement of whether goods or services were provided in exchange for the donation.  For cash donations of less than $250, you still need a receipt, but a cancelled check or bank/credit card statement will suffice.

While most charities are familiar with these requirements, we do see a fair amount of improper receipts each year.  Take time to review the acknowledgements you receive and keep them on file for your taxes.

A Final Consideration. Unfortunately, thieves often use tragic events to take advantage of donors’ kindness by creating fake charities and pocketing the money.  Be on the lookout for Oklahoma Tornado-related scams and make sure you know and trust the organization.  You may want to research more broadly for additional details about the charity you are donating to and how they use their funds.

As with any tax situation, the rules for claiming charitable donations are nuanced.  If you are planning on claiming donations – for this situation or others – consult with a tax professional for targeted advice.

For more information on how you can help the Oklahoma tornado victims, regardless of the whether the gift is tax-deductible, visit www.charitynavigator.com.