On December 20, 2007, the IRS released a redesigned Form 990, Return of Organization Exempt from Income Tax, for tax year 2008 (to be filed in 2009 and later years). The new form incorporates comments and suggestions from the over 650 e-mails and letters received during the comment period, which closed on September 14, 2007.
According to experts from the nonprofit sector, charitable tax deduction laws will likely remain unscathed from Congress in the near future. However lawmakers are still dealing with several charitable tax break issues that expired in 2013 and there is uncertainty on whether such tax breaks for charities will continue to exist.
President Barack Obama has consistently tried to limit the amount of tax savings the rich get for itemized deductions and will likely mention this issue is his upcoming proposed budget. However individual adjustments in tax policy typically don’t stand a chance in getting passed unless they’re grouped together
Ron Wyden and Nancy Bass Wyden by David Shankbone (Photo credit: Wikipedia)
with other tax items. Experts say creating such a large tax bill likely won’t happen before midterm election in November.
Adding to the difficulty of altering charitable tax deduction policy is the probable change in Congress. Democrat of Montana and chairman of the Senate Finance Committee, Sen. Max Baucus, is soon leaving Washington to become the ambassador to China and his likely replacement, Sen. Ron Wyden, is a strong supporter of charitable deduction. Baucus was expected to pass a broad tax overhaul before his retirement at the end of the year, but now people think it’s unlikely to happen because Wyden is expected to work at a slower pace.
According to Andrew Schulz, executive vice president of Foundation Source (a group that advises private foundations), “There’s zero percent chance any significant tax reform will happen this year.” Others who work with charities and nonprofits feel the same way.
Steve Tyler, senior vice president for public policy at United Way Worldwide, says 1,000 United Way leaders will be “vigilant” when talking with lawmakers if charitable tax deductions are discussed when they’re in Washington in May.
Documenting Donations for 2014
As long as proper documentation is provided, both individuals and businesses can deduct donations from taxable income. It is always best to check with the Internal Revenue Service (IRS) if you’re wondering what documentation is required. The IRS has strict guidelines for submitting charitable contributions as a write-off, which is an expense that gets deducted from your taxable income. You can learn more about tax smart contributions here.
If you want a donation to be seen by the IRS as a write-off, you’ll need proper documentation. This can be a cancelled check, credit card statement, bank records, or a receipt. The receipt must have the charity’s name on it as well as the amount you donated.
If you plan on donating to a charity and wish to submit it to the IRS as a tax write-off, you need to make sure the charity you’re supporting is approved by the IRS. Charities approved by the IRS are usually those that offer some kind of relief or are associated with religious and educational organizations. In a lot of cases local volunteer organizations such as animal rescue groups are approved by the IRS.
However don’t assume you’ll receive a tax break from the IRS without checking to see if the charity is approved. Just because the IRS’ list of approved charities is long doesn’t mean the organization you’re donating to will be on it.