IRS Rules on Deducting Charitable Giving

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Every year people give away billions in money and items to charities. This giving helps people in need. There are tax benefits that can come with that giving. To help provide guidance on that giving, the IRS has guidelines. Here are the guidelines:

Rules for Charitable Contributions of Clothing and Household Items

To be tax-deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more that includes, among other things, a description of the items contributed. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, 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. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, 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, a 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.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

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Money Clubs for Children

zealblack2bboy2band2bpiggy2bbankStarting an after school money club with a few other classmates can go a long way in the development of a child’s understanding of money. They can not only arrange trips to the bank together but they can also sit down every so often and talk about how money affects their lives. This provides a great experience that can go a long way in a child’s understanding of money.

Today many schools do not make money management a part of their daily curriculum. There are a number of very valid reasons why. Something has to be done however to bridge the money intelligence gap. The reason, at a certain point every child will grow up and have to be money smart. Without lessons on money they will have a financial intelligence gap that could hinder them. It won’t help with their family and it won’t help their work life.

Take Children to the Bank

Clubs can do a number of things to promote childhood understanding of money. As mentioned earlier members can take monthly trips to local banks. While they are there, club members can deposit allowance, birthday and holiday money they get from family and friends. They can talk with the tellers, bank managers and other employees about their accounts and how they work. They can also go over many other aspects of banking.

Children Share Reports on Money with Each Other

The young members of the club can also do reports on different aspects of money management and share those finding with their fellow members. They can go over the history of money, report on how salaries work or explain to each other how bills are paid. However, no matter what the money report is about each member gets something that they might not have received before. Those who have, can add to the conversation.

Parents Share Money Ideas with the Club

Another great way for children to bridge the money intelligence gap is to have parents come into the meetings with their own experiences with how to handle money. Parents can do this on their own, through the PTA or working with the local bank representatives.

Children look up to adults and parents especially. Parents can work together on the right ideas and presenters to give their children the best lesson they can on how to handle money.

Children of all ages can start or continue the process of learning about money management along with everything else they need to learn. The challenge however has been how to make that learning happen on a regular basis. Starting and expanding a money club can go a long way in encouraging that learning process.

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