Common charitable contribution mistakes to avoid

The holiday season is one of the greatest times for gift giving, not only to friends and loved ones, but also to charities and other organizations. As the holidays also fall within most individuals' end-of-year tax planning, many people may also want to write off some of the amounts and assets they gift. While this can earn households a valuable charitable contribution deduction, it's important to follow the rules associated with this tax benefit in order to qualify for the write-off and avoid potential tax issues.

There are a number of common mistakes many people make when it comes to deducting charitable contributions, and knowing what to avoid can help individuals claim the benefit without any problems. For instance, it's important to ensure that any organizations receiving donations for tax purposes are considered "qualifying" under federal tax law. Examples of qualifying organizations include religious organizations, most nonprofit charitable organizations (such as the American Red Cross), most nonprofit educational organizations, nonprofit hospitals and medical research organizations, nonprofit volunteer fire departments and nonprofit organizations that develop and maintain public parks and recreation facilities. Individuals who are unsure about whether an organization is qualified should consult with their tax preparer.

Ensure you get proper documentation
It's also important for individuals who donate assets and cash to get a written acknowledgement from the charity detailing the amount of assets gifted over, and whether the donor received anything in exchange for the gift. This is especially important for cash or assets of $250 or more. The Internal Revenue Service often scrutinizes charitable contributions closely, especially for higher amounts. Therefore, securing information from the charity that outline the fair market value of any items received, the date the contribution was made and any other important details can be helpful in the event of an audit. 

It's also important to make sure all checks are sent on time. During the holidays, mail delivery tends to slow and it may take longer for charities to receive checks. Therefore, individuals should ensure their mailed checks are postmarked on or before Dec. 31 to receive credit for the 2013 tax year. 

Lastly, for those who are donating gifts of high value - such as real estate, paintings, antiques or shares of a family business - securing an up-to-date valuation is important. Confusion over the value of gifted assets can cause issues with the IRS, especially if items are aggressively overvalued, so securing a valuation from a professional can help eliminate some of these errors.  

For a more in-depth look at Liberty Tax Service, visit the Give Me Liberty! Magazine. Follow Liberty Tax on Facebook and on Twitter or contact Liberty Tax directly at 1-877-at-Liberty.