Donations, Tax Deductions, and Online Fundraising Auctions
If you are still reeling from the glee of the holiday season, you may want to start to think about tax season. I hear your sighs. Although the IRS has extended the 2012 tax filing date by two days (April 17th), there is no reason to delay. There are a number of tax laws when it comes to charitable contribution deductions.
For cash donations, deductions are not allowed without receipts. In case of audit, the IRS uses three methods to substantiate charitable deductions:
• Canceled checks
• A credit card statement
• Written acknowledgement from the charity (showing the charity’s name, date of donation, and amount).
These changes are significant to philanthropists large and small. Tossing cash into the ‘ole collection plate or depositing a bag of clothing to a Salvation Army drop-box may no longer be the best idea.
What does this mean for the fundraising industry?
Nonprofit organizations holding charitable fundraising events need to be even more diligent about issuing receipts for donations of cash, items, or services.
The good news is not only do online auctions (powered by BiddingForGood) provide your generous donors the mechanism to easily donate online (the Donate Items or Donate Cash feature buttons), but they also provide a post-auction record regarding the sale of an item donation (the Donor Email feature).
This automation means: no extra work for the nonprofit, and complete tax information for donors.
Donors: Tax season is upon us. For 2012, think about making contributions via online auctions to support causes you care about. Be rest assured that your gift will be well-received by both the non-profit organization… and the IRS.
Best of luck!