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Charitable Donations

Cash in tax chips on monetary gifts

If you give cash or a cash-equivalent gift to a qualified charity at year-end, you can generally deduct the entire amount of the donation.

Strategy: Make sure to comply with all the recordkeeping requirements. The IRS is a stickler in this area.

Although recent tax-law changes have made it tougher to substantiate monetary contributions, it's usually worth the effort.

Here's the whole story: Currently, no deduction is allowed for any contribution of cash, check or other monetary gift unless you can show a bank record or credit card bill (for donations under $250) or a written acknowledgment from the charity (for donations of $250 or more). The written acknowledgment must indicate:

  1. The amount of the contribution
  2. The date the contribution was made
  3. The name of the charitable organization
  4. The value of any benefits you received (such as tickets to a banquet)

Therefore, you can't simply write off cash giveaways like you could in the not-so-distant past. But contribution of less than $250 made via check or a credit or debit card can be substantiated by your canceled check, bank statement or credit card statement.

Credit: Small Business Tax Strategies